[quote=UCGal]
People who bought pre-bubble are less likely to look at peak pricing as the “goal”.[/quote]
Totally agree, UCGal, and this is the point I keep trying to make when folks claim that “sellers won’t sell until housing prices are back at 2005 levels.” That’s a total load of hogwash!
Lots of people didn’t cash-out/HELOC during the runup. A lot of people own their houses outright with a $40K cost basis. They couldn’t care less what houses were worth in 2005, because many of the old-timers knew it wasn’t real (I’ve talked to many long-time owners who didn’t think 2005 prices were real/sustainable, but they had no reason to sell their homes, as they were paid off or had very small mortgages and low tax rates). If they spent $40K on a house in 1972 and it’s now worth $600K, they will gladly take the money if they need/want to sell, even if it was “worth” $1MM when all the fraudulent loans were swamping the market.
This is a just as much of a “threat” to high prices as REOs, IMHO. While the govt can control what the banks do (much to my chagrin), they cannot control what legitimate owners do when they want to sell their homes.
It’s only bubble-buyers (and HELOC’ers) who think the world revolves around 2005 housing prices. They don’t like to acknowledge that the rest of the population isn’t as indebted as they are, and aren’t as dependent on housing prices going back up to 2005 “wishing price” levels.
