Mortgage payments for Alt-A and option-ARM loans won’t hit the height of their scheduled -sharply upward- resets until 2010-11. Hence, unless home prices start rising soon and fast, these resets will drive up foreclosure and repossession numbers to levels even much higher than they are today.
IMO, This is the variable that will knock the shit out some of the more desirable areas of SD. How many homeowners back in 04-06 purchased something a little out of their range, with a time bomb loan, with hopes of either an increase in salary or skyrocketing equity to save them, all in the name of keeping up appearances. Now finding themselves with a shrinking job market, collapsing equity and financial system on the brink of implosion and facing a neg-am that is about to reset, like looking down a barrel of a shotgun. I’m sure quite a few people are sweating, cursing their significant other for running up the CCs and contemplating walking from their mortgage as I write this.
You can’t have it both ways: either sales go up OR prices go down. There will be no miracle that suddenly replenishes either people’s incomes or banks’ ability to lend, or both. The mounting job losses, of which there is no end in sight, only exacerbates they all ready horrendous state of the market.
The only possible conclusion that does not include a fairy tale or divine intervention, is that home prices will keep falling for years to come. If they stay high, there will be no buyers. And without buyers, prices will fall.
