The answer to that question is LACK OF FINANCING. Reality, is a banker that already has enough bad loans. That is not even close to happening. Most of the 100% loans that are resetting have value. The bank can sell the property for more than the note.
Inventory in San Diego has risen above 20,000 units and sales are at 4,000 for the month. Instead of calling this "5 months of inventory," lets call it what it is; a buyer seller ratio. There is one buyer for every 5 properties listed. Calling it "inventory" suggests that it would sell if only they had more time. More likely, its too high priced and would not sell, thats why the inventory numbers are increasing. The increasing numbers indicate the "block head mentality" of "what it use to be worth."
Another good indicator of a collapse would be an abundace of VA Repo's for sale. There are none right now, there were 3 last month for the whole state of California,--real dogs at outragious prices.
San Diego just passed the 1995 inventory high for housing that was set during the last BOTTOM in the real estate market. If you consider that a "train wreck," we are not even close to hitting anything yet. Phoenix has almost 50,000 listing and they are still selling real estate. In our area here, there are now about 5 cars in front of every house. It didn't use to be that way.
Noticeably, the papers are picking up on this phenomenon of excess housing. It is an item that is not really understood. Prices are stable and inventory is going up. What they need to realize, is that rich people can always afford to buy, it us poor people that can't afford these prices. So when nothing but high end houses sell, the average sale price increases or in this case stays about the same.
Right now, real estate is a one item event that cannot wreck on its own. Its going to need help. The capital financing this market is far from dead.
The other shoe has to drop, and I think that its name is Fannie Mae.
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