Absolutely true LA_renter. I agree it’s an emotional issue. Being on the sidelines (and very, very happy about it) obviously makes me root for the correction. I don’t want people hurt – but in the long term it will allow people that have been prudent to be able to buy homes. It is emotional. What is more emotional is the people who own their homes (or more than one) and/or make money in real estate. It is very hard to argue against your self-interest.
I saw something on one of these posts about the stages of all bubbles. We are now in the denial stage. All booms have these stages. Most people know that there has been a flattening of the market, but still look at short term return to increase because that fulfills their desire. We haven’t entered the next stage which will be a mass exit. And when I say mass exit I don’t mean everyone will sell – I just mean that anyone who will need to sell within the next 5-10 years will probably try to do so sooner than later – because the market will realize that it is only getting worse.
What I am most concerned with is that with a true public understanding that the equity they have is being eroded that consumer confidence will tank. Consumers spend 70% of the economy. With decreased business, companies will try to protect the bottom line. In our society – letting people go is very simple. With higher unemployment and wages going flat or down we will have increased economic danger. And unlike the housing market, the stock market can turn on a dime. With both equity and investments wiped out (and a catastrophic debt hanging over our economy) I think that we as a nation will be like the folks that are getting foreclosed on right now.
I hope its softer than this – but hoping doesn’t make it happen.
