[quote=briansd1]I agree that the vagaries of life affect the selling decisions. There will always be people selling and buying.
The extremely low inventories, as compared to a normal organic market, do indicate that people are not selling because they don’t want to “give it away.” Why? because sellers still want bubble prices.
The data indicate that homeowners are hunkering down because of loss aversion. They will pay for it in terms of time value of money.
We are 1/2 way into a lost decade for housing… give it a decade and people will more likely give up. As I said before, we will not see it reflected in nominal prices (because of inflation and government intervention) but after 10 years, real, inflation adjusted, prices will reflect reversion to the mean.
To those who don’t take care of oral hygiene, dentists like to say “pay me now or pay me later, but eventually, you’ll pay me.” I think the same thing will play out for homeowners (50%?) who bought, or refinanced at the peak. [/quote]
I don’t get it, if price rises in nominal term but decrease in real term, why should home owners care? If anything, in that scenario, it would be a no brainer to stay in the place. Especially if you’re locked in for 30 years years. Rent tracks nominal price, not inflation adjusted price. So, if nominal price keep on rising, then the rent vs buy equation keeps on getting better for those who are staying put.
