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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: jackjc who wrote (34907)6/28/2005 1:59:12 PM
From: GST  Read Replies (3) of 110194
 
<selling dries up as few will accept the price drop> I am writing from Hawaii where this view of yours showed up in the decade-long slump from 1992 to 2002. Prices at the high end dropped more than 50% but of for the average house it was more like 30% and people simply put the house on and off the market rather than keep going down in price.

The difference here this time is likely to revolve around the balance sheet of the owners. Asian buyers in the 80s had money from banks that did not want to call the loans. "Local" owners had better balance sheets and could weather a decade-long drought in prices. Will US banks who are fueling today's bubble sit around while today's speculators owe them money? Or will they foreclose. If they foreclose it is no longer up to the "owner" when they will sell or at what price. Prices in the vacation market could topple like dominos as the loans get called across the country.
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