Monday, October 20, 2008

A Mystery

This AP report on a recent rise in home sales in southern California would seem to reveal the following mysterious process has occurred without any kind of action from either Washington or Sacramento:

  1. A few years ago, there was a "bubble" in housing prices, meaning that prices rose to an unsustainable level.

  2. Housing prices rose to a level where people stopped buying, and the bubble burst.

  3. Housing prices plummeted to the point at which now people are buying more houses again.

  4. Once the fallout from foreclosures settles, analysts expect prices to stabilize and begin to rise again.

What a remarkable serious of coincidences. Now, where was that article on how the market doesn't work?


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