Wachovia Issues Special Housing Report

From the report:

"We have long noted that many of the problems currently plaguing the housing market can be traced back to the huge role speculators played in the housing market back in 2004, 2005 and early 2006. Speculators made demand appear much stronger than it actually was from a fundamental standpoint. The added push from speculators drove prices up to levels that priced out many buyers in California, Arizona, Nevada, the greater Washington D.C. area and areas around New York City. While these markets had the greatest speculative excesses, investors and speculators were active in markets all across the country. What needs to happen now is for prices of new and existing homes to adjust back to levels where families earning the median household income can once again afford to buy a wide assortment of homes, particularly in Florida, Nevada and California. Price declines in these markets are likely to be fairly significant in coming quarters. For the rest of the country, price adjustments will be far more modest and most areas will simply see price appreciation slow rather than endure outright price declines."

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