It seems like the ability to accurately measure the drop is lagging. I could see a 20% drop “effectively” if you want to talk value for the money. I think a good indication is builder price reductions. It is hard for me to imagine a market wide YOY median price drop of 20%. I know it is misleading in a rapidly moving market but it is the most widely reported barometer and considered by many to be THE measure of market performance.
If the buyers are going to have to be more financially sound in the future I could see the median moving pretty slowly. Here is my theory: Most people have a price range or payment in mind when looking for a home. Most people aren’t real estate savvy and are looking to spend X amount of money. The amount is almost “pre spent” if you will. This is how the monthly payment theory of our economy seems to work. I think people are looking to maximize the quality of the home for the price they feel comfortable paying. If prices continue to decline it would seem that the natural inclination for many would be to get a lot more value for their money rather than spending less. I’d just throw that out there as an assertion that could be ridiculous. I will do the same thing if and when I buy. It’s just that my “comfort” price is about 50% of the current asking prices.
