Another thing (I think) this auction shows is something I’ve discussed in the past. Despite the fact that these properties are overvalued and should get huge haircuts, there is a HUGE amount of money on the sidelines this time around. This wasn’t the case during the early-90s meltdown. I know a lot of wealthy, liquid folks who are not overextended and are waiting for property values to drop. While I think there’s a lot of downside left, when people start talking about 40%-50% drops from peak to trough I keep thinking, “Ain’t likely to happen – there’s just so much real dough out there waiting for the sh*t to hit the fan.” Just something to think about.
