kev374, your comment is astute. If you look at sales, there was a strong indicator of reversal in 2001. Then suddenly, a new burst of energy hit the market in the form of exotic loans. Had this not occured, our down cycle would be 2002 – 2009.
This “fluff” that you mention will evaporate in the next 2 quarters as subprime lending comes to a screeching halt with the introduction of the new lending regulations. Since 70% of buyers use ARMs, and over half are sub-prime, I think we’ll lose half 35% of our buyers until prices come down to 3.5x per capital income.
