Why does anyone expect prices that rose over several years to drop overnight? In general assets fall over about the same time period as they rose – the humps are roughly symmetrical.
One reason for this is people are loathe to realize gains. They hate to sell stocks, and houses, that have lost money. The smart money walks away from losing investments. In equity markets there is a lot more smart money than dumb, while in housing markets there is a lot more dumb money than smart.
So in the housing markets you have a minority that is put into a must-sell mode, while the majority sit tight until they are inclined to sell. Very few have the fortitude to sell because they expect future price declines. Rich is right to be monitoring NOD’s as a leading indicator of housing prices, because must-sell is the predominant driver of declines.
All depending on the mix of must-sell houses to come, but it would not surprise me if the decline will be longer and slower than the rise. I wish it were otherwise, because I too am itching to buy a house, but I will wait until no one ever expects to make money on a house again.
