[quote=jstoesz]The move up market is “stuck” because current mortgage owners cannot afford to take the hit on their current house. Everything sells for the right price, but folks who are having trouble moving up are trying to sell for past fictitious price levels while buying at current prices. That only works if you have a time machine.[/quote]
Exactly.
This is why many of us were thinking the bubble would take a long time to fully correct. A lot of people thought it was a “normal” RE cycle, and didn’t realize that the housing prices in 2001-2007 were the result of an unprecedented credit bubble. They’ve been waiting for prices to “go back up” to bubble levels. Good luck with that.
It’s the duration of the downturn that will hurt the most, and the duration was extended by all the bailouts. The bailouts have only served to make the downturn last longer, and will end up costing more money than if they had let things settle to levels where the economy could have stabilized on its own.
