Think about it – the average person gets their news on TV. They talk to their friends, relatives and neighbors; of these, 90% of our acquantances will lie to us about their less profitable decisions if given a chance to do so. A person who is reading the Union-Tribune qualifies as having more than the average exposure to the news. People who hang out on internet forums like this one are the tiny minority – we are the geeks everyone else ridicules.
Given these limited sources of information and considering how muted (until the last couple weeks) these sources have been about the potential for losses, why would the average buyer be spooked right now? I think the buyers who have pulled out are those who are more well informed – an example of that are the professional investors. The sheeple remain, and if there are big losses ahead it is those people who are going to get hurt the worst.
Unfortunately – and saying this makes me look heartless – I don’t think we really want those sheeple to come around too quickly. An more orderly retreat over a protracted period of time may have its merits. For one thing, having catastrophic failures among the lenders would affect credit availability. If that happened a sale at the reduced price still isn’t going through for lack of the 30% down payment or because of a 10% interest rate. Beware of unintended consequences.
