[quote=CONCHO]For example, if a foreclosure appraises at 500K but a shrewd buyer negotiates a deal at 400K, a follow on buyer for a similar house will baseline his purchase price at 400K, not the correct 500K. In effect you have a circular death spiral in home prices to the benefit of the buyer.
Funny how no one complained about it when it was working the other way around. In a neighborhood of $400K houses, whenever any house on the block sold for $500K, everyone on the block was immediately $100K richer and would tell you all about it every chance they got. I guess it’s just not as much fun on the way down :-([/quote]
Funny! That’s the first thing that came to my mind as well.
When fraudulent transactions and no-down, neg-am loans were used by speculators with no skin in the game, the rising prices of comps were “based on fundamentals.” When prices drop as this fraud is wrung out of the market, somehow prices are “below market.” Funny how that works…
