I think most, including you powayseller, underestimate how bad a 10% drop in median home price really is, or how long it takes. I agree, most pepole buy the “soft landing” theory and think that means a 5-10% reduction.
Of course, they don’t realize that is $50,000 on a median home !!!!! Alot of money. Two years of after-tax salary over and above basic living costs for many.
Consider the last bubble deflation was really quite nasty and the median price dropped ‘tween 10 and 15%. So, when people say “only 10%” I don’t think they realize – that is a deflating bubble not a soft landing.
Also, I think few realize how long it takes. A fast drop of 10%, then back to “normal” wouldn’t be so bad. It is the years of langushing that cause pain. It is more like torture than a simple injury that heals right away. As you pointed out – like a frog in cold water that slowly starts to boil.
20% would be nasty, nasty, nasty, especailly if it lasts for 7+ years.
