Where is the housing market going?

As my wife and I continue to search for a home –

You: What’s going on with that?

We bid on a home a few weeks ago and didn’t get it.

You: Any follow-up?

There was another opportunity to bid higher and become a firm back-up, but we decided not to.

You: So now what?

We’ve basically exhausted all of the homes currently for sale in our price range in our desired locations so we’re waiting for something new to come on the market.

You: That’s it?

Yes, although it’s also possible that something will fall in price so that it enters our price range.  We’re being patient.

Since we’re eventually going to buy a home and because I’m in the field I’m in, I watch housing numbers carefully.  I also watch what people are saying and feeling, since so much of our economy is psychological.  To that end, here are two different articles I came across in the last few days that I recommend you check out.

High-End Homes Frozen Out of Budding Housing Rebound is a great page 1 article from The Wall Street Journal from a few days ago. It remains one of the most popular articles on their web site.  It discusses the lack of a bottom for the high-end homes and offers up some potential reasons including:

• The lack of a homebuyer tax credit for upper income individuals
• Significantly higher interest rates for loans which are not conforming (greater than $417,000) regardless of income or affordability
• Higher down payment percentage requirements for bigger loans

If you’re considering buying or already own a home north of $400K, consider this required reading. If your current home ownership or aspiration is less, I’d still recommend  you take a gander, since what happens at the high end of the economy affects everyone.

I came across another article related to the housing market in this week’s Carnival of Personal Finance.  The Continued Slow Deflation of the Housing Bubble is a discussion of how the aging of America may have a long-lasting impact on housing prices.  Based on a 2007 study at USC, it’s an interesting take by Tough Money Love. I say that even though I don’t agree with some of its conclusions, as you’ll see from my comment at the end of the article.

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What do you think about home prices now? In the near term?  Long-term?