Oh goody, another doomsday post. Let’s see, this article was written 6 months ago and since then prices have actually increased, at least in SD. Well, they have another year to see how events play out.
I’d like to review the assumptions used to make this projection, especially if this is a double dip projection banking on the 2010 tsunami that hasn’t shown up. Recently, I had an interesting conversation with a friend who aggressively mined the rich CV/56/SantaLuz/4s vein from 2003 to 2007. He flipped 4 homes all for profit, financed with option arms and IO loans. He said exactly one second after he concluded prices had flattened (2007) he sold everything. If this article is counting on loans like his to default further depressing prices, or counting on other loans that have already defaulted, then it is way overly pessimistic.
I would also point out quoting percentages can be deceptive, that is a 50% increase does not equal a 50% decrease. For example, a 200K house that appreciates 50% to 300K only needs to depreciate 33% from peak for equivalent change. Richs curves show decreases from peak of approximately 33%, 41%, and 52% for low, mid, and high end, respectively. You can do the math to see what that equates to in % appreciation from original baseline.
