So we know that a recession is coming. It would be foolhardy to buy before then.
HLS, the people who aren’t selling because they are fine are not the ones keeping the prices high. It’s the sellers who are still asking high prices. And they still have some willing buyers, but not as many.
Questions are:
1) How many sellers are must-sell? Can they are afford to hang on and how long? I think that most can hang on for another year but not much longer. Empty houses cost a heck of a lot in holding costs.
2) When will must-sell sellers give up and lower prices. They can’t lower prices now because they have no equity or not enough equity. They will walk rather than bring money to escrow. Lenders hate short sales because that only encourages more (news travels fast). Wait for foreclosures to see lower prices.
3) When will buyers stop paying the high prices?
a) When lenders stop offering 100% financing and require substantial downpayments.
b) When teaser rate loans that make initial payments “affordable” disappear.
c) When interest rates go up.
d) When underwriting get stricter and require full doc.
f) When qualifying for a loan means qualifying under the fully amortized monthly payments.
g) When interest-only loans are reserved for the most credit worthy.
h) When the recession hits.
Those are already in the process.
I believe that we’ll have facts on the ground to answer those questions in the fall of 2008. Be a little patient Alex_angel. The price “increases” you’re seeing right now is all subterfuge for the carnage (decreases) to follow. It’s all a mind game. May be best win.
