Myth Busters

Fortune magazine has a series of interesting articles. The first is their RE bubble burst survival guide. Notable quote:

There’s no mystery about what it will take to close the affordability gap and bring the markets back to life: Prices will have to come down, and incomes will have to move up. The only question is how much of the adjustment will come from rising incomes and how much from falling prices.

Gee, I wonder which one will adjust first: incomes or house prices?

But the best one in the series IMO is their unmaking of RE myths article. Here are the myths that they debunk (just read the article to understand why they say these myths are bunk):

The sudden shift in the nation's housing markets is exploding some long-held beliefs. The first is that a scarcity of buildable land on the coasts keeps a cap on supply and prevents prices from falling.

A second myth is that today's big homebuilders learned their lesson in past downturns and now launch projects only when they have firm buyers lined up.

A third tenet holds that home values never drop in areas where employment is rising.

The current boom has spawned one new myth of its own: Hot markets will glide to a soft landing...But the housing bulls are relying on wishful thinking.