The definition of high prices varies so greatly in the US that I am not sure I believe that more than half of homeowners would think "high prices" are bad.

A $2 million dollar price might seem inflated in Nashville, but it certainly would not in LA or NY. What is the poll’s definition of high price?

The poll offered no definition of high prices, Grant, because it's not asking if a certain price for a certain type of home is good or bad. As Josh Dowlut put it, it's whether "strong" real estate prices are a desirable thing.

Since this blog is aimed at Baltimore-area residents, I wouldn't expect a lot of Nashville, LA or NY folks here. (But you're all welcome!)

When I was a kid I remember my father thought a swath of 200K homes on the perifery of our neighborhood were obscene demonstrations of conspicuous consumption. Now, its a "starter" house.
Trouble is, once people are invested, it does a lot of damage to personal wealth, retirement nest eggs, etc for prices to drop precipitiously. It makes more sense for there to be a variety of homes in a variety of price ranges. It appears that the slump is increasing the supply of reasonably priced homes, i.e. plus or minus 200K, which is good. That does not mean that every 300/600K home is overpriced, but presumably that they are different homes that for one reason or another deserve that price. During the bubble, the problem was that 200=275K homes were selling for 450-650K in the Balt/Wash area. This meant young or first time buyers were closed out or had to overreach. Economists, realtors, and rocket scientists aside, one knows a house that shouldn't sell, or shouldn't have sold, for 500K plus when you see it.

55% of owners and 92% of non-owners agreed with my take. To the 45% of owners who take the establishment view: the only way you can realize any gain as a home owner is when you become a home SELLER, and for that you need a buyer.

If you really stop and think about it, while there is an investment component to a house, much of a house functions as a durable consumer good. While it is much bigger, more expensive and has a longer life, its core function is little different than your washing machine or car. We don't desire the price of other consumer durables to go up, so why housing?

This issue is deep, very deep, much deeper than most realize, and probably deeper than the average reader of this blog cares. On the off chance that someone does, I'll summarize a paper I'm in the midst of working on. At the root of it is how our fractional reserve banking system works, how money is created, and the income distribution effect of inflation and deflation. In short, our banking system creates money from making loans. When the loans go bad, the money supply contracts which causes deflation. Allowing housing prices to fall would cause more loans to go bad, contracting the money supply and lead to a deflationary spiral. Mainstream economic academia has beguiled the public into thinking deflation=depression, but this belief is conflicts with over 100 years of history from the US and most major economies around the world. Inflation/deflation has no longterm effect on growth, or living standards, but it does affect income inequality. Specifically, inflation redistributes bottom up, deflation redistributes top down. You can see why those in power opt for inflation.

I have to say lower prices should be much more desirable. Lower prices will not only bring new buyers to the market, but it will also help the broader economy with more disposable income. This can only be achieved with lower prices or higher wages. I have to think higher wages are not in the picture. So, lower prices it is.

When you have lower prices, you can afford to put more money down on the house. Also, closing costs will be lower as the majority of those fees are based on the purchase price such as title insurance and transfer taxes which often add up to about 3% of the loan amount. Also, lower prices SHOULD lead to lower property taxes and hazard insurance. The county/city could always raise the tax rate if revenue goes down too much so that may not be as much a factor in the long run.

Lower prices will also be safer for lending as banks can lend out less money at higher rates. Why would a bank rather lend 300k at 5% than 200k at 8%? Not only does the bank risk less money, they get a higher rate of return on their money. Then, to top it off, higher rates will allow people to save money to put in fixed income accounts such as bonds, treasuries, CD's, etc. with a higher rate of return as well. Who wants to save money when you earn such little interest? There is not much incentive to do that. Higher rates will lead to lower values and strengthen the dollar. As a result, that will also lead to lower prices in utilities, food, gas, etc. so overall living expenses go down too (at least in theory).

All in all, higher rates and lower values have more advantages over lower rates and higher values. As rates remain low, inflation will keep the costs of pretty much everything high. This weakens the dollar and makes everything cost more money. Bringing the cost of goods down will help the economy so people will spend again with disposable income they have left over from lower costs.

IMO - taxes and association frees are a bigger issue when I'm looking at a house

There were so many condos I crossed off my list because of outlandish fee when I bought it was ridiculous.

Josh is right on above. The housing mess (which is still a mess) affects everyone but most of all it affects the wealthy.....the reason home prices are being propped up and not allowed to let the "market" do its thing is that deflation would have occurred. Tax revenues would come down (even further) loans would go bad (banks would close) and there would essentially be a new world order. Ben Bernanke is making sure the rich stay rich by attempting to give them their money back (banks getting TARP funds and STILL getting FREE money in the form of zero percent loans)......if the working class allows this to go on..shame on them. Oh - and Goldman Sachs made 4 Billion or whatever last quarter (they should be out of business)...

High prices to me are most disturbing in BAL city, because any inclination we have to "reach" for a house anticipates paying 2.24 percent of the purchase price in taxes every year. That's $750.00 a month on a $400K home.

Also, our stocks have started to recover, and we feel that the stock market is a much better investment than real estate right now, which means that the longer we wait on the sidelines, the more house we will be able to afford.

Lastly, buying an expensive house means sacrificing fiscal health -- as the house won't promise to appreciate very much and most of the housing payments will be paying interest and not principal on the home.

In sum, the "accountant" side of any buyer's brain advises him not to reach for an expensive house right now.