I honestly do not think anyone will use the 401k money as an IV to keep the home they are in. Remember that you don’t just get to keep the money, it is essentially borrowing from the 401k so you have to pay it back and with interest. You may as well use your visa to do it. I think more people would just keep the 401k and lose the house.
Pabloescobar you make a very valid point. One which I conveniently ignored in all my thoughts about a 2010-2011 bottom. One of the reasons I have always thought about a bottom in that timeframe is based on previous cycles that were about 6 years in length. However the root causes behind depreciation cycles differ and thus the length of the cycle should be commensurate with the cure, not really with anything else. If indeed there is a huge overhang of ARM resets come 2011 and many of those are still indeed there when we actually get to 2011, then it is indeed LOGICAL to imply another wave of inventory and thus price pressure in that timeframe.
Speculation that people will lose homes before then or refinance out of the loans before then is just that speculation.
As with all my other posts regarding playing the guessing game of where the bottom will be, unemployment is the huge wildcard. If we get engineers, biotech guys, and lots of 6 figure salaried people looking for jobs or accepting lower paying jobs, then yeah we will see many of those homes going back to the bank before 2011… 460 billion is alot of lettuce man.
