As more and more people default, the feel-good-era of “buy a house and rake in the dough” will start to reverse, and people will more apprehensive to buy.
We’re just starting to see the downside of the no credit, no money, no problem lending practices.
I don’t see how the retiring baby boomer generation can do anything but worsen the downturn. There will be a disproportionate amount of people on Medicare, and social security, who CAN’T afford million dollar homes to retire in. If anything, the smart ones will cash in now on their equity, rent or downgrade to something smaller and live of the gains for the rest of their lives.
I venture to say most retirees don’t buy a more expensive home to retire in.
Add to that weak dollar that will likely necessitate higher rates to attract foreign investments.
My speculation? This drop will be harder and faster than the 80’s or 90’s. To put a number out there, 10-15% this year, and that much in 2008.
Incomes are WAY below what is required to afford an “average” house.
