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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: XoFruitCake who wrote (51996)	4/13/2006 8:35:46 AM
From: Think4Yourself	Respond to of 306849

The drop in prices in this down cycle COULD get really ugly. I agree with others here that this cycle was fueled by the tax law changes coupled with the free money after 9/11. In that respect it really IS different this time. I also agree that many people threw common sense to the wind and got in over their heads. They figured the free money would last forever and they couldn't lose in a climbing market. Tax free profits and write off the investment expense. Now the fed is taking away the free money part of the equation and prices are starting to to come down. Homeowners are in a bit of shock and denial now as they are beginning to realize prices CAN go down. As time goes on those folks will continue to pay their mortgages and property taxes. They will also have to worry about maintenance, and insurance. They will become more desperate to unload as prices come down and they realize their negative cash flow situation is getting worse. Vicious cycle and all that. In that sense the down cycle will also be different this time. Whatever happens, the one thing I am sure of is that the folks thinking things will flatten out for a year and then resume climbing are as wrong as they were 9 months ago when they thought prices would keep climbing indefinitely. The down cycle has started. Things are going to get ugly, much worse than right now. the only question is, just HOW ugly will it get? Congress is talking about reversing the tax law that started all of this. If they actually do that, which I doubt, then all He$$ is going to break loose in housing.