Some people elsewhere on the board seem to be saying financing for high-end homes is still easy to get, and there are tons of wealthy people to support prices in the better areas.
My suspicion is that as long as prices are down by less than 10-20%, or for only a year or two, then those others may be right. But when price decreases exceed 20%, and they stay down for 2 years, even most of those wealthy people living or buying in the nicer areas will begin to lower their expectations significantly. Until then, prices will only move slowly in response to the gradually increasing ratio of distressed sales to the number of wealthy optimistic buyers who can get big loans.
Given how long a worthwhile(30-50%) price decrease would take under these dynamics, the possibility that inflation will be used to limit the nominal price decrease can’t be ignored. Most voters would prefer higher inflation over lower home prices. So if you’re going to wait it out for 3-7 years, you may want to buy assets that are likely to hold value even in the face of high US inflation. Yen and other currencies of the countries where savers are more politically powerful that they are here in the USA are my first choice.
Comparing August pendings to peak season sales is nonsense because sales always drop in August. If only he had included a comparison YOY we might see what is happening. I dont know if he’s onto something or not until he compares the YOY numbers.
.
