RE prices are sticky on the way down. Check out Rich’s charts in the Bubble Primer. The ride up takes 5 – 7 years, the ride down takes 6 – 8 years. While someone who is excited about a new house and the prospect for future appreciation will pay more than they should, that same person, when faced with morgage lates, doesn’t put up a For Sale sign, doesn’t reduce his sales price, and holds on as long as he can.
An analogy is this:
A kid, on a hot summer day, gets to the pool. Excited, he jumps in. An hour later, dad calls him in to dinner. The kid takes a few minutes to slowly swim over, and then gradually pulls himself out of the water. Maybe someone else has a better analogy 🙂
We all need to be patient. I expect the ride down to take 5 – 7 years.
