Navy, you can feed them, you are right, it sometimes brings out some good discussions. For instance sdnerd’s question about percentage of decline and markets further down the tracks on the pain train’s route. Sdnerd, it is a logical theory but it doesn’t work like that, what you will see is a shorter downturn, but the percentages will be similar. There will be some examples of value holding but history tells us that there is no immunity. If during housing booms, certain areas did not correct then when the next boom comes along they wouldn’t be able to rise or today they would be completely out of whack, which they aren’t. Certain pockets will avoid revealing their reduced value because of their age and stability so they will appear to “sit out” the downturn. Not whole towns but small areas and ultra premium coastal or “one of a kind” type places.
But do not for one minute think that the pain train isn’t building steam and has planned stops in even the best of places, it has more fuel than ever before, it will not run out gas before it hits the coast. While an area might have higher stability, higher income, lower subprime ratios so it has done fine so far, when the train does come to town there will be other factors that will work against it and will work to level the playing field percentage wise. The first hit areas did so when liar loans were still plentiful, the economy was fine and the masses were still ignorant of the bubble. When the more expensive areas feel the full power of the force, many factors will be different,those factors are:
-The media and anyone with a radio is well aware of the downturn in housing.
-Banks are tighter with their money
-full doc and downpayments are the order of the day
-employment and overall economy will be worse off
-much cheaper houses will be available much closer, and closer and closer.
The last one goes back to Bugs’ original theory of interconnectivity which we are already seeing.
