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 🙁
