Good points Bugs. The listings even if they are not selling have a peer pressure of conformity. If everybody else is listing at $800K, even if they aren’t selling, must people will think the market is at $800K, instead of seeing the 1 in 10 that is selling at $700.
For “must sell” inventory, I wonder if we won’t get an additional spike this fall. When I look at the ARM reset chart, I see the option ARMs sitting out starting at month 30 and going on. To my knowledge, most option ARMs were written with 5 or 7 year reset windows and equity reset that trips at 110% or 115% of value which is the timebomb on the option ARM. People using the option ARM minimum payment, that’s the majority why else do you get an option ARM, hit their loan limits on average in 29 months.
I eyeball the teal, map that to a 60 month original reset period and then move it up to a 29 month equity reset, and that teal hump that starts as a small trickle in month 30, slides all the way over to month 1. Which puts currently about at where the teal part starts to get thick and then get real thick this fall/winter.
I think the chart would have been made using the time bound reset parameters and not the optional reset parameters of excess equity burn.
