One more anecdote to show that people are expecting a spring rebound that will lead another a real estate run-up, and that we bubble believers are in the minority.

I’m holding my breath for the ARM resets. The next 2 years are going to see huge drops in real estate. One of my favorite writers is ocrenter; he has a great writing style and digs up the most interesting information. Just today he had a story about a guy who used his house as an ATM; the house cost in the $300s and the guy took another $300K out in cash over a 5 year period. Now the bank owns it. Multiply this story by tens of thousands of homes in the next 2 years, and we’re going to see huge inventory jumps and price increases.

Inventory always drops in the fall, but sales are falling too. Bob C. wrote that sales are down over 40% in September. Where is the bounce? A bounce would mean that the October price drop is less, if Oct 06 sales are down less than Sept 06 sales (i.e. only 20% down from Oct 05), then that would be a bounce.

We’ve got bubble denial. People think this price drop is real but temporary.