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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Jim McMannis who wrote (28249)3/18/2005 5:34:06 PM
From: GraceZRead Replies (1) of 306849
 
Yeah, obviously the prices are too high and/or the supply is too great...<G> but what happens to make it that way? Don't make me ask Grace.



Nice to know I can provide an effective threat.

Elroy is right, bubbles don't need a trigger to collapse. RE bubbles are like pyramid schemes, they are fed from the bottom, supported by the base, the entry level buyer. The base runs into the mathematical impossibility of expanding further because you run out of people who are willing or able to take the chance of getting left holding the bag. The entry level buyer is always weighing buying vs. renting, these two things get too far away from each other in price, they'll opt to stay renters. This deprives the move up buyers of someone to sell their house to and so forth. Sooner or later somebody does the math and they figure out their chances of being better off buying are next to nil.
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