Great perspective! I’m selling my house for around $800K, we’re in escrow, and the buyers are getting a 5/1 ARM w/ 100% financing! With 80% of loans in CA reported as I/O, and some combination of no doc, neg am, and no down, these people will have to sell in 2006 – 2008 when rates go up. They won’t want to, but will have to.
Another interesting point: baby boomers are holding on to their homes as a retirement nest egg. I’m not sure how prevalent this is, but a few of my friends have told me they are doing this. Now we’ll have another round of boomers who are loosing their retirement nest egg.
Whew – we are getting out just in time. I believe we’ll have a 50% correction over the next 3 – 4 years. January will show a big drop in prices. NAR figures lag by a month – talk to any realtor – the MLS is full of price reductions, and many people are pulling their homes off the market because they can’t get their asking price. When they relist in January, things will be only worse. A lot of people are waiting for January to relist.
