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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Tradelite who wrote (11765)7/25/2003 10:56:41 AM
From: J. P.Read Replies (2) of 306849
 
<<Those people (buyers) ARE the market.>>

I wholeheartedly agree with you on this point. The prices are the prices because that's what people are willing to pay.

But my feelings are that the supply/demand curve has been shifted not by demographics, but by the easy access to capital. Easy lending policies have led to easy access to capital not seen before. So you have a whole group of new buyers who no longer need to raise the amount of cash needed before, and no longer face the scrutiny that existed in the past. This is all well and good as long as the bank's easy lending policies stay in place. This is reflected in asking prices and it's safe to dive into pool. The danger now is that you jump in, and the banks pull the plug on the easy money and instead of landing in the water you land on the concrete. All of the sudden you have a big overleveraged depreciating asset.
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