I think that we are going to see a big spike in inventory this spring that will pass the high from last year.
1) People who pulled out of the market in the fall hoping for better fishing in the spring are going to relist.
2) Mortgage resets are going to force more sales.
3) Liquidity will (hopefully) begin to dry up as more subprime lenders go under. Less liquidity will translate into an even lower sales volume than we have seen so far.
Anybody have a prediction for inventory, sales volume and YOY decline?
Sales volume: -10% YOY.
Price: -7% YOY(As measured by median).
Drying up liquidity will slow the price drop. The reason is people won’t be able to move up or out. They’ll get squeezed into staving off foreclosure. Also median has little reflection on the actual price drops on like for like or same model home.
I believe face value will hold strong to one digit losses, however the real price may be completely different as sellers rebate closing costs and other items.
Also, since I don’t know how REO sales show on median, I think they’ll be negliable until Jan-08. The REO will watch their property list bloom until that time.
Then again, maybe we’ll hit free fall. A lot depends REO, but I’ll start another thread for that.
I think inventory will resume growing and sales and prices will continue falling. Over the long term (3-5 years), I believe that we’ll see substantial reduction in prices.
But, I expect that the road downhill (and back up) will be bumpy (with a false start, too, probably), as it was last time around:
[img_assist|nid=2365|title=
San Diego Resale Homes, ’88-’98: (Deseasonalized) Sales and Median Prices|desc=|link=node|align=left|width=466|height=350]
I won’t supply a SWAG, but I wager that we’ll see an important movement downhill, this year.
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