Chris Gmyr

Independent housing economist Tom Lawler, who has pointed out frequently that his dog Kita could have qualified for a mortgage at the height of the boom — despite having a low “Fido Score” — is arguing now that prices for low- and mid-range homes are stabilizing.

He says they will continue to do so as the foreclosure rate declines for middle-income home owners. Lawler attributes that to the “stickiness” of home prices, which he defines as slow to adjust downward because stable home owners don’t need or want to sell immediately.

In previous downturns, driven by regional unemployment, home prices fell slowly, Lawler says. This time he argues that things happened a lot faster because banks that owned foreclosed properties sold them aggressively. That forced prices down much faster than they fell in previous downturns.

Source: The Wall Street Journal, James R. Hagerty (07/22/2009)