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Monday, January 3, 2011

A different kind of bubble

A different kind of bubble

WASHINGTON - The Washington area was the best-performing housing market in October, but generally only in more affluent parts of town.

"Housing prices are rising where the lawyers live, where the high-priced bureaucrats live and where Muffy and Buffy who are coming down from Harvard to regulate our lives are going to live," University of Maryland Economist Peter Morici told 630 WMAL.

The average price of a home in the Washington area in October rose 3.7 percent from the year before, according to the latest unadjusted data from the Standard & Poor's/Case Shiller 20-City Home Price Index. Nationally, prices fell 0.8 percent.

"Housing prices follow jobs. Barack Obama is building up the government and sabotaging the private sector. Houses are going up in Washington, down everywhere else," said Morici.

There is wide disagreement among economists on the future of housing in the United States. Some economists say housing prices must fall at least another 20 percent. Others says it will be less than that, some say it will be more and some say housing prices have bottomed.

This year is on track to finish as the worst for home sales in more than a decade. High unemployment and tight credit have kept people from buying homes, despite some of the lowest mortgage rates in decades.

"The private sector simply is not creating jobs. Folks don't have money to pay for houses. Are we surprised housing prices are tanking outside of Washington? Not at all," said Morici.