Remember that most of the main stream R.E. professionals are still telling people that prices are stable, will only decrease by a few percentage points, and still in 2006 have not dropped as much as they went up in 2005 alone.
For many the jury is still out on whether the decline in housing prices will be substantial or just a hicup Although we have seen some declines in R.E. prices, the run up since 2001 is way more spectacular. Most who bought in 2000 – 2003 and maybe early 2004 are still (to the untrained eye) in good shape. Although foreclosures are up to three times last years rate, the higher levels are normal for the years before 2001.
If the homeowners who took out toxic loans in 2004 – 2006 can continue to refinance with new loans (toxic or otherwise) the anticipated shock from foreclosures will not be there to drag down prices next year. If home owners continue to keep their overpriced properties off the market price declines will continue to be modest. If people in mortgage trouble continue to work three jobs to keep up the payments on their houses . . .
Plus I have not seen anything yet that ties R.E. prices to the “value” of the dollar. If the dollar value is declining on the world market, then asset prices in dollars should increase – much like stocks and other hard assets do as the dollar declines – in theory. If this is true then we should be seeing a 10% increase in R.E. due to currency offsetting bubble declines. If housing prices are insulated against world currency prices until inflation takes up the difference in the domestic market, then there will be no currency impact in the short run and . . .
So before you get too angry with family, try to see how fragile any position is.