The preceding chart suggests to me that there is not enough inventory that people want… and too much inventory that people don’t want. If we were in a normal, free market, I would expect higher-end homes to come down in price, and lower end homes to come up in price to bridge the gap.
But as followers of this blog know, I believe we are not in a free market at all, but a very manipulated one, that is vulnerable to many factors that could lead to futher downward pressure across the board.
Meantime, while lower-end homes still present good buying opportunities, notwithstanding futher price corrections, they are becoming increasingly difficult to purchase. As the rate of loan defaults continue to increase, banks are playing with fire by holding onto the non-performing assets, rather than foreclosing and putting them on the market, while there is still demand.
I say “while” because once rates tick up, or incentives go away, or 5yr interest only loans re-set in mass, or deriviatives explode, or unemployment rises to a job near you, or companies run out of areas to cut costs to show profits, or the stock market crashes, or any or all of these events or more occurs… it will be too late for people to buy with confidence at a pace that will outrun significant price drops across the board.