I agree that 2001-2004 was like dollars raining down on anyone who sold a house. My contention is that the gains during that time were due to a credit bubble, not a normal housing cycle.
Our home price doubled between 1998 and 2001, and was already becoming unaffordable to people who were buying/living there. The fact that prices are already down to that level (and still falling!?!?) shows that we were probably at a top in 2001.
BTW, people who owned in 92057 and other “starter” neighborhoods were able to cash-out hundreds of thousands of dollars which were used to buy up the ladder. IMHO, this “downpayment” money is what’s keeping the mid-higher tier homes from showing the same stress as what’s found in the lower-end markets.
People who “bought-up” during the bubble could still HELOC or cash-out refi over the past few years (equity from prior sales), just to hang on a little bit longer until “the market gets better.”
As people are no longer able to bring $200K-$500K in for down-payments, the mid-upper tiers will begin to see the same kind of stress as seen in the lower-end areas, IMHO.
I DO NOT think “it’s different here.” People were stretching and getting into toxic loans all along the housing spectrum.
See Jim’s Klinge’s post about Jenae and the million-dollar sales that were bought using 100% loans and promptly defaulted on. These sales were used as comps for all the other sales (many of which also saw 100% loans or neg-am products).
We are nowhere near then end of this credit contraction, and probably have many years before we reach “bottom,” IMHO.
