Supply and demand have always dictaded price on an open market. It is no different with the current housing market. We have a huge inventory with more to come this year. So why are houses not being bought by current buyers if home affordability rose to its highest level in at least 20 years in the fourth quarter of 2010? One of the reason there are so many houses on the market it's because people can't get approved to buy them right now. With current prices, if people had the income and credit to get them, they would be scooped up at a rapid pace. As inflation starts to take over, we will se interest rates begin to climb as a tool that the fed uses to keep inflation down. This is going to make it harder for buyers to qualify for a loan on home they want and the supply will increase to even bigger levels. It will be interesting to see how the economics of this cycle reveal themselfs.
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