To me this correction is playing out like clock work. A very slow clock. I think people have stock market expectations in regards to the downturn. We all saw the Nasdaq pop and the relentless fall. History shows that property market bubbles do not behave that way. IMO if the economy holds you will see what we are seeing now (low volume, high rate of NOD’s/foreclosures, slightly falling home prices) year in year out into the next decade. If we go into an economic slump you will see steeper nominal price declines. The rent verses own equation really starts to stand out in a market like this. Given the current home price to income, home price to rent fundamentals combined with stagnant to falling prices, there is absolutely no financial gain of buying a home right now. It is the worst possible thing you could do with your money right now in a strict financial sense. Now for people with a very long term outlook that don’t look at this as an investment and can find a home they are happy with and can afford, who cares. For people that are still stretching themselves to the hilt to squeeze into something they normally wouldn’t want because of some fear of being priced forever 1) dude you already are priced out 2) you just made the worst financial decision of your life (that can be backed up using hard data).
Keep in mind that we have not seen the true impact of the ARM resets and won’t have a true idea of how this will play out until late 2008. If you want see what we are facing refer to the Credit Suisse Arm reset schedule. If that chart is accurate we have not begun to see the worst of this yet. We have only seen the roller coaster stop going up. IMHO.
