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

To: Drygulch Dan who wrote (56169)	6/16/2006 1:40:24 AM
From: John Vosilla	Read Replies (1) \| Respond to of 306849

I agree Dan. Only if it hits your close friends or family or if you are in the RE biz would you even care. Life goes on..

To: Drygulch Dan who wrote (56169)	6/16/2006 5:51:44 AM
From: Dan3	Respond to of 306849

Re: I think she is saying that the majority don't give a rats behind about what the few strapped people that will be affected by a mortgage crunch. Yes, but the majority are neither buying nor selling their homes. There about 120 million homes (houses, condos, etc.) in the US. Between 6 million and 7 million are bought and sold each year. Of the 6 million to 7 million, about 2 million are new construction (so there are normally about 4 million existing homes being sold each year). People sell their homes for a number of reasons - job relocated, need more room, they died, etc. If an additional 1.5% of the existing home owners have too much credit card debt, their mortgage readjusted too high, they can't afford gas and electric costs, any more, etc. and are in financial trouble and must sell, it adds 1.8 million additional homes to the market - a number approximately equal to the total number of new homes built each year. So, to take it to extremes, if 1.5% of homeowners get into financial trouble this year, then we need zero additional new homes built. Now, obviously, there's more to it than that. Some people prefer new construction and have the means to pay for it. But new construction is generally in a less desirable location than existing construction (simply because builders don't build in inconvenient, undesirable locations until after the convenient, desirable locations have been filled). So the new home builders are competing with a lot of distressed sellers, who have to take whatever price they're offered, and these "I'll take any offer" sellers have offerings in better locations. 1.5% is an extreme example, but I think it's easy to see why it only takes a tiny percentage of existing home owners getting into trouble to affect the new home builders. realtor.org census.gov realtor.org huduser.org