And I have to disagree back. It is easy to sit back in cyberspace and throw out theories like that which make sense but do not represent reality.
The low is completely dettached from the high end. The low end crashed because the buyers never could really afford paying their mortgages even if the interest rate was zero. Today’s buyers on the low end are heavily dominated by investors picking up properties that cash flow. The low interest rates are bringing 1st timers also but they are having a tough time against the investors.
Buyers in each tier stick to their tier and dont move as freely as the Butterfly theory suggests. A perfect example is the CAR family. They could have gotten a much bigger nicer and cheaper home long ago had they been willing to migrate like butterflies to Oceanside, Vista, San Marcos, Escondido but that was never a real option for them because of location of work and lifestyle. Sure they romantisized the idea of a big house on a 1/2 acre or more lot in areas like SW Esco around Lake Hodges but if they were up for that they would have gotten it long ago.
The high is getting smacked now for two reason that I can see. Sellers finally capitulating that no recovery is coming soon combined with the drop in the superconforming loan limit (the main culprit IMO) by $150K this Fall. Prior to then you could buy up to 850K with an easy qualify gov’t backed loan and put 20% down. That now only gets you up to about $700K. The jumbos are harder to qualify for and many want 25% down. What is going on in the Upper Tier has nothing to do with the mid or lower tier. They are completely different buyers.
