The basic psychology has changed somewhat, and is continuing to change. It is getting more and more negative, and I don’t see any gushing positiviy around (save for the NAR, who can manage to see a positive in a market that couldn’t stop increasing to the stratosphere, no wait, okay, would increase a bit more slowly, no wait, would land “softly” with stable prices, no wait, would dip just slightly cuz that’s a good thing for buyers, no wait..on and on and on, the rubbish factory churns steadily!!!)
What else explains the lack of buyers, and the still large inventory? The continuing decrease in Mean price/sq. foot as Rich pointed out in the charts? Most of all, when all is said and done, despite the mix of wishful thinking and facts that we use to guide us, I believe firmly that recent history is rock solid, and for the most part, indisputable. History tells us that this ship is sinking. My folks bought property in Southern California in 1991, not doing there homework, and they didn’t recover their original purchase price till 1997 or 1998. And that was typical, not an isolated case! I can tell you for a fact that a decrease in interest rates doesnt make a $500,000 piece of rubbish property and more endearing or attractive to me (I’m a renter), I want that damn price to come down, period, to something fair based on fundamentals, such as comparing what it would cost to rent that property vs. a 30-year mortgage with 10-20% down…
Also, I did a quick comparison on Excel, looking at the monthly payment on a $500,000 mortgage with 0% down (typ. these days), 7% interest with 2% prop taxes, between a 30-year and 40-year loan. the 30-year payment is $4,159/month and the 40-year payment is $3,940/month, a difference of $219. That is something, yes, but it’s not going to make a tremendous difference, it won’t bail out people who already have negative equity in there homes! Who will refinance them anyways? I believe in history and facts, so far, both lead me and others to an increasingly glaring conclusion: this ship is going to sink, who knows how deep, and how long it will take, but sink it will.