Home prices have registered a huge drop since the real estate bubble burst in 2007, falling 3.4 percent in the year through October according to the S&P/Case-Shiller Home Price Index.
But Karl Case, economics professor emeritus at Wellesley College and co-founder of the index, says that despite negative consumer sentiment toward home ownership, better times may be ahead.
“People are discouraged and fearful,” he tells The New York Times.
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“They’re moving in with their parents. People thought home prices would never go down. We now know that they do go down, and you got hammered if you were overleveraged.”
And the fear now is that home prices will never rebound, Case says. But he sees signs of light.
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“Household formation is increasing and the vacancy rate is dropping,” Case says.
“Housing starts are at a 60-year low, and they’ve been there for three years. That’s unheard-of. We’re starting to see some signs of an increase in value.”
For those looking for a place to live, home prices are compelling, Case says. “If you’re buying a house or apartment to live in and pay for over time, and can afford the payments, then it’s a terrific time to buy.”
Hedge funds now see value in housing as an investment. "We turned bullish on housing. A rebound is coming," Andrew Law, chief investment officer at hedge fund manager Caxton Associates, tells The Wall Street Journal.
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