Here’s my take on it. Background: I own, well within my means, and think prices are going to drop. And I hope they do, so I can buy a bigger place in a year or two.
The thing about these bubble boards (and I frequent several), is they are primarily filled with people wanting to buy. These posts and sentiments are *everywhere* on bubble blogs/forums.
Yes a lot of speculators are going to lose their shirts, and a lot of soccer moms who bought million dollar homes with 0 down and teaser rates are going to get destroyed.
But, for each person I know like that – I know someone else on the reverse side. Not everyone is a complete fool with money, or living their life on the credit express. There are a lot of people (at least that I know) sitting on huge piles of cash, making very high salaries. I know (conservately) at least 10+ people who are all planning on buying in the next 2-3 years if prices come down some.
If you bought a place 5 years ago say for $300,000. And today let’s say it’s “going” for $600,000 (very conservative). Lets put all other things aside (taxes, maint., etc) and assume a normal rent of $1,500 a month. 5 years of rent is $90,000. Seems to me this person is going to be just fine despite any price downturns assuming they didn’t do anything stupid.
I guess my point is, yes a lot of people did stupid things. But there are a lot of smart people out there as well. There is a very large pool of people waiting to buy – who can afford it and have been saving like mad.
Prices are going to drop I’d say 10-20% depending on the area (yes a dumphole in Temecula or out in the sticks may drop 50%). Then a few years of stagnation. I think you’ll find as soon as prices go down the 10-20% range there will be a whole new flood of buyers that keep prices somewhat stagnant.
And for every “FB” who is about to go under, there will be a circle of vultures all ready to buy at a discount/upon foreclosure.
Gap between the rich and the poor increasing. Nothing else new here.
It’s easy to search the MLS for the few people who are taking a hit. But you can also search and find a large pool of people who made hundreds of thousands of dollars selling homes the last few years.
