An excellent thought regarding the increase in pricing:
The run-up in prices caught the attention of Dean Baker, co-director of the Center for Economic Policy and Research in Washington, who regarded the trend as “serious grounds for concern that these markets are being driven by speculation.”
“While some speculators buying up homes at a bottom can be positive, the sort of price rises that you are seeing there may be excessive,” Baker said in an email to The Times.
He noted that a big factor in the rising median price is increased sales of high-end homes, which skew the results to the upside. Indexes that track specific home resales, such as Case-Shiller, show far lower price appreciation.
Still, Baker said he thought the California market could experience “serious gyrations” because of the heavy purchases by investors hoping to sooner or later flip the homes at a profit.
“The speculators likely have pushed prices above where the market would put them in some markets,” he said.
Ed Leamer, director of the UCLA Anderson Forecast of the economy, had a more sanguine take on the trend than Baker.
“I am inclined to think that what he calls speculators know more about the market than he does,” Leamer said. “It’s a good thing for professionals to be putting a floor under home prices.”
http://www.latimes.com/business/money/la-fi-mo-california-home-sales-20121213,0,5057854.story
I’ve been reading Dean Baker for more than 16 years. I promise you, I watched him make the three most important MacroEconomic calls (warnings) of the last 20 years – out loud, in advance to decision makers who could have EASILY headed off the catastrophe we were hit with. IMO there is NO Economist deserving a higher level of our respect.
Come on Doug, what call is he making here?
He is speculating about speculators.
the sort of price rises that you are seeing there may be excessive
The speculators likely have pushed prices above where the market would put them in some markets
If Dean wants to get down here on the street and investigate up close, and then make specific calls about the facts, then I’ll listen.
Until then, these types comments sound like blogger snark. When reporters call for a comment from a guy of his stature, he should know that what he says better be on the money. This is too vague and unsubstantiated.
http://www.economicpredictions.org/dean-baker-predictions/index.htm