Scruffy, instead of continuing the argument using 1990s employment statistics and how the uber-rich are likely to be unaffected by the downturn, how about discussing this in terms of monetary policy and macroeconomic theory.
This run-up in prices has not been driven by any sense of fundamental underlying value. Hence, it is not sustainable. Rather, it has been driven by cheap, easy money, combined with virtually non-existent loan underwriting standards and kept aloft by real estate “professionals” who fervently believe that prices never go down.
You can look at any market in California right now and the metrics have completely reversed themselves. Sales are down (in some markets like Sacramento, Bakersfield and the San Fernando Valley they are plummeting), and NOD/NOT/foreclosure notifications are skyrocketing, in some cases 150% on a YoY basis (San Diego County is my example here).
How on earth can you believe, let alone push, the assertion that all is well and this is nothing more than a hiccup? I grant that Armageddon is strong word, but a 20% correction in most markets will be devastating, and that is certainly not outside the realm of possibility in that it is occurring right now. Looking at some of the neighborhoods in and around Sacramento right now (Rancho Cordova, Galt, Elk Grove) there are price corrections in excess of 30%. Factor in carrying costs, realtor fees, and closing, and you are talking about a major haircut, especially when you consider that the houses in question are already substantially overvalued to begin with.
You’re not actually David Lereah or Lawrence Yun, are you?
