Actually, I think that when the market does finally hit bottom and the inventory drops to below 6 months worth of sales that the “bounce back may gather momentum very quickly. There are a lot of people who got a taste of not working for a living and who are sitting on the sidelines trying to work the REO flips and such right now. By the time this drags on, I think these people will jump back in at the first opportunity.

I’ve had conversations this week with a couple brokers and “third party” loan originators. Thankfully none of them are clients of mine. These guys know there is no profitable play for their clients right now but they don’t care. It’s all about the commissions and the churn. They are chomping at the bit looking for a dream to sell, and according to them they have a lot of buyers who want to dream that dream again.

I don’t think we should ignore the sentiments of these bulls. The only thing that would slow them down is the availability of financing. If the financing is at all reasonable, I think there might be another price spike. The only question in my mind is whether it will lead to the gross distortions we had this time, and that will depend on the greed of the lenders and the laziness of the government.

I doubt you could lose money betting against either.