This Week's (Less Dire) Prediction About Housing Prices

Divorce, porous borders and a gradual slowdown of the U.S. economy: all good news for home owners and bad news for those waiting for a crash in real-estate prices before buying their dream homes. So says a Harvard study reported by today's Financial Times. Harvard's study—one of those data-mulching reports that valiadate backyard barbecue scuttlebutt—concludes housing prices are likely to stay high, though slower sales will calm the frenzied speculation and double-digit percentage profits that characterized the past few years. It seems that "accelerated household formation"--increasing fracturing of family units—is helping to drive demand for houses, as is the rise in financial fortunes of the enormous immigrant influx of the '90s, who are finally in a position to buy their stake in the American Dream.

The disappointment in the Financial Times's article is nearly palpable. "The Harvard study concedes that a slowing housing market could take a heavy toll on growth, as Americans become less able to use their houses as ATM machines," it notes, but even a slowdown has a silver lining: "This could help rebalance the US economy, reducing demand for imports and so stemming the growth of the trade deficit."