Most people are not affected by what is going on, other than their net worth dropping.
Their house is still worth 2x-10x what they paid for it, and they never sucked their equity out.
They need a place to live, and don’t view their home as an ATM.
The % of the population that is in over their head is relatively small, but those that are losing their homes are getting the majority of the attention.
I think that there is another group of people who aren’t concerned today and think that they have plenty of equity and aren’t concerned about their ARM because it isn’t adjusting until 2008 or 2009. They will be added to the statistics at a later date.
They may not find out that they have no options until it’s too late.
In a bubble market of any product, when the bubble bursts, the prices at the peak have no bearing on where/when the market will stop falling. Silver peaked at $50 and dropped to $6 or $7. NASDAQ was 5,000 and dropped to 1300.
Gold dropped over 50% from the peak as well.
If 70%-80% just watch their home values rise and fall, they still have a place to live. Most people don’t day trade their houses.
It is impossible to pick tops or bottoms in any market, but markets rarely collapse quickly when they hit a top nor do they bounce quickly at the bottom.
There is still plenty of downside to the local property market, but probably only 10% of homes will be trading owners. These will get 90% of the attention.
When the market does finally hit “the bottom” I think that it will be flat for a long while. There will be no rush to jump in as it still won’t pencil out to buy as rentals with any cash flow. Many people will be burned and have bad credit as a result, and unable/unwilling to buy again.
For those that are waiting to get in, I think that there is still at least 2 to 3 years before the bottom, but it will remain cheaper to rent than to buy for a very, very long time. Save up for the down payment and keep your credit score up!
