I will tell you what is keeping home prices too high….
ILLIQUIDITY! EQUITY MARGINS! SIZE OF ASSET TO PORTFOLIO!
Houses are not stocks, they can’t be dumped on a moments notice. People aren’t going to dump houses until they have to. A typical investment in stock has 0-50% in margin. A lot of homes (especially ones that NEED to sell) have 100% in margin (the amount owed vs. the potential selling price).
This coupled with the Days on Market lies (Games played with days on market for a home), create a large number of sellers who would like to sell, but buyers not stepping up to the plate. There are also a large number of buyers who are not willing to sell, because they hope for better times.
As it takes longer and longer to sell a home, and as prices stay stagnant, the market will stay stagnant. As prices fall and economic data gets worse, prices will continually come down and there should be a change in the mindset of sellers. Unfortunately this will make the buyers even more frightened and they will demand even lower prices.
It seems to me that this stagnation is just a lull, prices will come down much more in the fall, and then might have little rebounds along the way. With the true data being as bad as it is (inability to compare apples to oranges, lies about actual selling price (because lots of costs have shifted but aren’t shown in the actual price), and more egregious data games by the NAR, it isn’t surprising that we keep hearing conflicting viewpoints.
Just like the war in Iraq (over 6 years), we keep hearing politicized viewpoints, we don’t get any real data, we hear so many conflicting points that it is difficult to get a handle on the outcome…. (I’m not saying this for political reasons! Just an analogy!) Same stuff in real estate. The Realtors control most of the media messages (completely controlled it until 6 months ago), the data is impossible to get accurate, and only blogs like this really have a discourse on what the future holds (but none of us have a crystal ball).
Anyone see what happened to Countrywide yesterday / today? They think that even by 09 it won’t get better (just like the war, they will keep calling the end until it’s 2015!)
