Wednesday, March 31, 2010

There are many kinds of speculation

I see that U.S. Home Prices are rising.

The S&P/Case-Shiller 20-city Composite Index, indictes that U.S. home prices rose for the eighth consecutive month in January 2010 - on a seasonally adjusted basis, by 0.3% month-to-month.

But what was actually expected was a 0.3% decline!

Why was a decline expected? Because of all the housing sector data in recent months, including home sales which show declines ranging from slight to notable.

So why the confounding rise, albeit marginal, in house prices?

Simple: house sellers are putting prices up to test the willingness of buyers to pay more.

Just what I too would do if I had one or more houses to sell.

In fact, all offer prices are a kind of speculation....

But some kinds of speculation are harmless or even beneficial, whereas other kinds of speculation harm the market. Sphere: Related Content

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