I’m glad that people generally decide to ride it out if they have the means to do so. If people are going to be irrational while the market is going up, we need them to be equally irrational on the way down. Otherwise we would get an explosive decompression that would oblterate other segments of our economy. So yeah, by all means we’d want them to be stubborn about giving up, with only the weakest players being forced into submission.
The best time for the market to go 100% rational – not that it will ever happen – would be when the market is going up. If the market doesn’t get distorted in the first place it won’t have all these losses either.
What annoys me is that people tend to portray their RE investments in a different light than their other investments. If their stock portfolio was down they’d acknowledge that they were holding a tough position and they were taking some losses. But a lot of people can’t seem to do that with their RE holdings. A lot of people will do anything to avoid having to acknowledge their RE investment is down and will get worse before it recovers to a break-even. They make it worse by characterizing everyone else who makes that observation as being jealous or bitter. You might as well be talking to a teenager about the hazards of smoking.
