The New Trend in Real Estate – The “Trade Down” Environment

Posted by Barry Ritholtz - The Big Picture

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“We’re in a ‘trade-down’ environment for the first time since the 1930s.” – Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley.

A front page article in the WSJ divides the residential real estate market into two halves: low/moderate priced homes, and the upper end. The Journal observes:

Housing is fast dividing into two markets: Sales of low- and moderately priced homes are picking up and values have stopped falling in some parts of the nation. But on the upper end, sales remain mired in a deep slump and price declines are expected to accelerate.

Signs of the divide are visible across the country, including in suburban Chicago. In middle-class Schaumburg, Ill., which had a median income of $65,000 in 2007, sales were up 41% in June from the depressed level of a year earlier and bidding wars have broken out on some properties. “I can’t even tell you how many I’ve been in over the last two months,” says Joe Stacy, a local real-estate agent.

…..much more HERE.