For every owner out there that is “testing the waters”, there are three or four others who are either going into foreclosure, facing higher mortgages due to arms reseting, actually paying principal on a former int. only loan, or just can’t afford the gas from Temecula to San Diego anymore. Hmm, I think there will be sellers, for a long time.
I think that those who “think” they are testing the waters now, only to pull their homes off the market because they couldn’t get that utmost rediculous price for their home, may be singing a different song in a year or two, when this thing goes full swing. They may wish that they weren’t so greedy in the first place, they still may have realized a great profit.
Some people presume that buying a trailer or moving to texas is the only way to sell a home and still have a place to live around here, but I wonder why they don’t consider renting? I’m renting a beauty(love it)and my parents are planning on selling their home of 15 years to do the same. Take for example the guy who wants that extra room for a gaming room. Say he has a home that could sell for $700k, and owes about $180k. He could take the $500 k profit and just simply invest in risk free CDs. At todays rates, (5.25% easy and probably going higher)that $500k could turn into $600k guaranteed in less than 4 years. While we assume a modest home price depreciation of only 25% in the next 4 years(most people here assume a much larger devaluation of todays home prices), his $700k home is now worth only $525k. He would make $275k in the next 4 years by selling and renting, vs. staying in his house while it drops in price. He could probably rent a home that has that extra room that his heart desires for about the same amount as his current mortgage too. Then, when he feels the market has bottomed, he can repurchase a much larger, nicer home, for even less money, and the next period of home price appreciation will be even more profitable.
