It may sound obvious but prices drop when buyers arent willing or able to pay current asking prices. Right now they are still able due to the creative financing available. What they aren’t in general is willing. All the statistical analysis in the world misses the key driver of sales in real estate…emotion. Right now the emotions are swinging negatively, hence sales are plummneting.
As for the ARM’s, I just dont know how prevalent they are among the at risk population. I beleive they will have an impact, it’s just hard to say how big that impact will be.
One thing that I beleive is greatly overstated has to do with job losses among Realtors. Everyone seems to think that realtors are swimming in dough when that is far from the case. A very few make great money ($250K plus). I’d guess less than 200. I would be very surprised if there are much more than 1,000 or so Realtors in SD County with net incomes over $100K. Personally, I beleive a great deal of Realtors are actually severely under employed. I know I am but have made the choice to be in order to spend more time with my family. The average Realtor is probably generating about $30K to $50K in gross comissions. After giving their broker an average of 40%, paying business expenses, self employment taxes and health insurance most would probably make a better living asking “Would you like fries and a shake with that burger?”
