The source of the money does matter if it is coming from HELOC’s, Cashout Refi’s, or tax advantaged retirment accounts that must be repaid back. These sources of income must be paid back, so are really speculative loans. Refi’s make that loan recourse (possibley) which means if you cash-out refi and then default on the old house, the bank can comeback looking for their money in the nice new house too.
However if the money is coming from savings, bubble sales, inheritances, bonus’s, gifts, oil $, parents, stock protfolio’s or other associated sources of cash then it is irrelevant the actual source. Cash is king. People have alot of money and a strong desire to buy a house. 12 months of falling prices will not erase the memory of nearly 10 years of rising prices. It brings on a stronger desire to buy as it seems deals are to be had. Only years of falling prices when everyone isnt talking about real estate and all the money to be had in it will kill the myth that real estate is always the best investment regardless of purchase price.
I will know the bubble is over when everyone cant get enough (enter next big investment bubble). Oil, Salt, Wheat, Fish food, Flowers, whatever. Our economy policys are bubble inducing, so there will be a next one. Everyone is still talking about RE and trying to figure out how to make money off it. We need the next bubble to make us forget so we can have people buying houses because they need a place to live and can afford it. Just watch out for Valentines day when roses are $200 each and salmon for dinner is $50/lb. Bubbles will happen, the only question is where next.
