
A housing recovery generally exhibits higher prices and higher sales volumes; however, after the 2012-2013 rally ended, home sales declined precipitously. Shouldn't home sales strengthen? Wouldn't a housing recovery based on strong fundamentals of job and income growth cause both prices and sales volumes to rise? Well, it isn't happening. Why is that? Most economists and housing pundits succumb to their optimism bias and predicted rising home sales in 2014: Trulia: 2013 was the year of the investor, but 2014 will be the year of the repeat home buyer. Investors buy less as prices rise: higher prices mean that the return on investment falls, and there’s less room for future price appreciation. Who will fill the gap? Not first-time buyers:…[READ MORE]