The value of someone’s home and its corresponding impact on that person’s financial picture (as well as its evidence of that person’s investment acumen) is of course a highly emotionally-charged issue.

Emotion played a huge role in the insane run-up of real estate prices. One cannot cite the impact of emotion in support of the run-up and ignore its impact on the correction that is underway, however. Emotion may keep asking prices high, may keep homes off the market and may lead to an extension of exotic lending to avoid a forced sale. We may see a battle between emotion and the cooling market/adjusting loans. Can emotion fend off these realities and ease the market into a less-than-catastrophic landing?

As for “not rubbing it in” to existing homeowners, for most there is simply nothing to rub in – at least not yet. Only the small percentage of folks who bought in the past year or so are presently experiencing or in danger of valuations below their purchase price. Hard to imagine rubbing it in to long-standing owners who are already up hundreds of thousands of dollars. I’m in the latter category and would find an “i told you so” attitude quite amusing.