It’s happening already. From what I’ve observed, the only homes that are actually selling are the ones that are way under last year’s prices. All the others just sit on the market.
I think a lot of the banks don’t want to lower the comps in the neigborhoods because they know that the rest of their 100% financed borrowers will then have no hope of refinancing and would have a high probability of walking away. Corporate America runs on short-term profitability, so I think the lenders know they are just pushing the inevitable losses into the future by listing the REO’s high and letting them stagnate on the market. Little by little, some banks sell houses at what the market will bear and the comps get lower each time that happens. At some point, the banks will have to unload these places en masse unless they want to become landlords for a long time!
