House Prices Are Bottoming — But for the Wrong Reasons
Present values of properties at the notice-of-default stage are clearly rising due to the shift in the mix of loans/properties going into default from lower to higher. This ‘mix-shift’ effect may push up median house prices in 2009 creating the appearance that the market is improving when in reality it is because more higher-value properties are defaulting, being foreclosed upon and reselling through the Realtor network.
—————-
This may not apply to Morgan Hill or certain micro-markets, but it is definitely something to keep in mind when bottom-calling.
