Q&A with a man who gave an early warning
Dean Baker, an economist who back in 2002 warned that the housing market was caught in a bubble, chatted with me recently for a Q&A. The results are in the Ideas section today -- you can read it HERE.
Here's his answer to the question, Do you think now is a good time to buy a home?
Across the Midwest, the South, upstate New York, you can find lots of places where housing looks pretty reasonably priced, isn't much different than it was 10 years ago. But places like the D.C. area, New York, Boston, it's hard for me to see that those prices don't still have a long way down to go.What about the Baltimore area?
Baltimore didn't have as much of a run-up as D.C., but it did have one. My expectation is you're going to see a lot of that, if not all of that, eliminated. ... Prices won't fall back to where they were in the '90s, even adjusting for inflation. They'll probably stay higher. But they'll certainly come down from their peak in '06.
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Comments
I don't get it, how is this terribly ground-breaking? of course prices will fall from their '06 peak, they're already back to '04 levels in the region! In fact, if you look at historic trend charts, we've already lost all of the artificial increase in price in DC and Baltimore, and DC prices have been hit much harder.
It's frustrating to see an area like DC, where prices have been consistently falling, lumped in with NY, where housing costs are continuing to rise! I don't see how you and correlate the two, or eve keep them in the same category.
Posted by: Jonathan Benya | May 27, 2008 7:45 AM
Depends on how you're measuring it. The average price in the Baltimore metro area was about $310,000 last month, compared with $305,000 in April 2006. If you're looking at the median price, that is lower now than it was in '06. (That's according to MRIS.)
The Case-Shiller index, which Dean Baker referred to in the interview, shows the New York metro area being down 6.6 percent from a year ago. I'm sure that ranges widely within the metro area, though.
Posted by: Jamie Smith Hopkins | May 27, 2008 8:33 AM