It is not that I do not agree with the plankton theory because I do. However, that would suggest that at some point in the future we will exhaust the number of buyers correct?
I don't think the theory says you'll eventually run out of buyers. We're not talking about the extinction of the plankton population. We're just talking about a crash in the plankton population. This would be analogous to a crash in starter home values. Even in the worst of times, people will buy starter homes and people will sell starter homes. There's always going to be some population of plankton around. But the size of that population affects everyone up the food chain.
However to get a good idea of when that will be we have to know how many buyers are move up buyers, and how many are still out there waiting to buy with move up money. To me it is a very plausible theory that makes sense, however, it is also kind of open ended as to when and how long the plankton theory will seriously thin out the buyers pools in these other desireable areas. Not saying it cannot or will not… I just tend to think like everything else, it will vary on a per area in timing and amplitude so to speak…
Yeah, I agree with this. The theory doesn't tell you exactly when the high end areas will fall. But I think if you keep an eye on the surrounding markets, you can get a pretty good idea. If you see the $500k homes start to crash … then the $1M homes crashes later … then the $1.5M homes crashes after that … If you believe the plankton theory, then you would predict that the $2M homes are next in line. The theory can't give you the exact timing, but it can tell you the order in which different markets will move. That information in itself can be very useful.
