Coworkers argument that house prices won’t fall…

[one_muggle]

It seems to me that equity-rich “paper money” people are far more likely to lower their price, should they need to sell–though they may have less impetus.

My anecdotal experience is that a vast majority of the low six-figure earners ($100-150k) either own their own home with tons of intact equity or are renting. The high-end crowd is sitting even prettier, which I guess is why it is nice to be high-end P^)
Seriously, I see way more expensive cars than high incomes, but the people I know appear strangely level-headed.

Most of these people understand that if they “lose” a hundred K of equity, they still haven’t really lost anything, but really have gained only a couple hundred K, rather than a few.

I would think that this kind of person, should they decide to sell, would actually be more willing to price at market than pursue last year’s prices–though these aren’t among the horde of forced sellers.

-one muggle

[SD Realtor]

muggle your post makes to much sense. In fact some people with lots of equity are like that. They see the opportunity to take big profits without being biased by the fact that two years ago their neighbor made more profit. They understand that they can take the profit, move on with their life, and make an even better return in the next few years rather then lose more equity.

Some of them understand that. Others do not. They believe that next year the market will magically turn. Or they believe that they will get a better return by holding on to the home. Or they are emotional about it and cannot fathom that markets go down as well as going up.

Then of course some people are just greedy….

SD Realtor

[SD Realtor]

muggle your post makes to much sense. In fact some people with lots of equity are like that. They see the opportunity to take big profits without being biased by the fact that two years ago their neighbor made more profit. They understand that they can take the profit, move on with their life, and make an even better return in the next few years rather then lose more equity.

Some of them understand that. Others do not. They believe that next year the market will magically turn. Or they believe that they will get a better return by holding on to the home. Or they are emotional about it and cannot fathom that markets go down as well as going up.

Then of course some people are just greedy….

SD Realtor

[SD Realtor]

muggle your post makes to much sense. In fact some people with lots of equity are like that. They see the opportunity to take big profits without being biased by the fact that two years ago their neighbor made more profit. They understand that they can take the profit, move on with their life, and make an even better return in the next few years rather then lose more equity.

Some of them understand that. Others do not. They believe that next year the market will magically turn. Or they believe that they will get a better return by holding on to the home. Or they are emotional about it and cannot fathom that markets go down as well as going up.

Then of course some people are just greedy….

SD Realtor

[cyphire]

The more important question (I think), is what happens to the people who aren’t selling because they didn’t sell at the top, but still would like to get out their equity?

I especially refer to a lot of baby boomers, who might have counted on their home as their retirement egg – especially as they didn’t really save any other money!

While I think that the vast majority of folks who would like to sell sometime in the next 5 years or so are waiting for prices to level off and go higher, what will their sentiment be if things keep getting worse? I think that there is still way, way, WAY, too much belief that the market will level off and will start appreciating at about 4% per year by next year or the year after.

I ask why?

The CASE Shiller index has us at around 300ish with a top of 320’ish? Most of the other crazilly priced communities maxed at 250ish and never got to the 300’s… Look at whats going to play out in the mortgage market… Higher mortgage rates in opposition to interest rates (as the lenders price in some of the future risk – they didn’t make enough money to cover the problems.), and further sinking home prices. Do you think this will be over next year???? The resets will go on for years. The 5 and 10 year ARM’s will be resetting as well and for those people who didn’t expect to stay in their homes, they will need to dump at some point.

If the market keeps going down for the next 5+ years… At what point to people say ‘STOP THE TRAIN AND LET ME OFF!’…?

There is no panic out there yet. What happens 2 years from now when prices have gone down another 20-30%? (Or even 10-20%)…. If you have a solid citizen, with good credit, with 70% equity in their home, and the prices go down 30%, they have lost almost half, not a third of their equity. And do you think that most of the people who own 1M homes only owe 300K on them? Including paying for college, cars, vacations, investments, etc? I don’t think so!

I think that there will be an ever increasing group of people who need to cash out, and they will keep dropping the prices until they do. It doesn’t take a large number of these people to push the comps down…. Just my opinion.

[cyphire]

The more important question (I think), is what happens to the people who aren’t selling because they didn’t sell at the top, but still would like to get out their equity?

I especially refer to a lot of baby boomers, who might have counted on their home as their retirement egg – especially as they didn’t really save any other money!

While I think that the vast majority of folks who would like to sell sometime in the next 5 years or so are waiting for prices to level off and go higher, what will their sentiment be if things keep getting worse? I think that there is still way, way, WAY, too much belief that the market will level off and will start appreciating at about 4% per year by next year or the year after.

I ask why?

The CASE Shiller index has us at around 300ish with a top of 320’ish? Most of the other crazilly priced communities maxed at 250ish and never got to the 300’s… Look at whats going to play out in the mortgage market… Higher mortgage rates in opposition to interest rates (as the lenders price in some of the future risk – they didn’t make enough money to cover the problems.), and further sinking home prices. Do you think this will be over next year???? The resets will go on for years. The 5 and 10 year ARM’s will be resetting as well and for those people who didn’t expect to stay in their homes, they will need to dump at some point.

If the market keeps going down for the next 5+ years… At what point to people say ‘STOP THE TRAIN AND LET ME OFF!’…?

There is no panic out there yet. What happens 2 years from now when prices have gone down another 20-30%? (Or even 10-20%)…. If you have a solid citizen, with good credit, with 70% equity in their home, and the prices go down 30%, they have lost almost half, not a third of their equity. And do you think that most of the people who own 1M homes only owe 300K on them? Including paying for college, cars, vacations, investments, etc? I don’t think so!

I think that there will be an ever increasing group of people who need to cash out, and they will keep dropping the prices until they do. It doesn’t take a large number of these people to push the comps down…. Just my opinion.

[cyphire]

The more important question (I think), is what happens to the people who aren’t selling because they didn’t sell at the top, but still would like to get out their equity?

I especially refer to a lot of baby boomers, who might have counted on their home as their retirement egg – especially as they didn’t really save any other money!

While I think that the vast majority of folks who would like to sell sometime in the next 5 years or so are waiting for prices to level off and go higher, what will their sentiment be if things keep getting worse? I think that there is still way, way, WAY, too much belief that the market will level off and will start appreciating at about 4% per year by next year or the year after.

I ask why?

The CASE Shiller index has us at around 300ish with a top of 320’ish? Most of the other crazilly priced communities maxed at 250ish and never got to the 300’s… Look at whats going to play out in the mortgage market… Higher mortgage rates in opposition to interest rates (as the lenders price in some of the future risk – they didn’t make enough money to cover the problems.), and further sinking home prices. Do you think this will be over next year???? The resets will go on for years. The 5 and 10 year ARM’s will be resetting as well and for those people who didn’t expect to stay in their homes, they will need to dump at some point.

If the market keeps going down for the next 5+ years… At what point to people say ‘STOP THE TRAIN AND LET ME OFF!’…?

There is no panic out there yet. What happens 2 years from now when prices have gone down another 20-30%? (Or even 10-20%)…. If you have a solid citizen, with good credit, with 70% equity in their home, and the prices go down 30%, they have lost almost half, not a third of their equity. And do you think that most of the people who own 1M homes only owe 300K on them? Including paying for college, cars, vacations, investments, etc? I don’t think so!

I think that there will be an ever increasing group of people who need to cash out, and they will keep dropping the prices until they do. It doesn’t take a large number of these people to push the comps down…. Just my opinion.

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