Phase 1: Buyers: Many buyers want very cheap homes. Sellers: Few sellers accept to sell at this low prices, as they still have jobs. Result: moderate sales volume with prices plunging relatively rapidly. Phase 2: Buyers: More buyers make "reasonable" offers. Sellers: More sellers accept to lower prices, demoralized by the continued plunge, and motivated by "fair" offers. Result: Prices plunge much more slowly, with high volume, some even call a bottom. Phase 3: Buyers: Very few buyers want to buy homes as the economy deteriorated (from other causes, not from the subprime meltdown), and many lost their jobs. Sellers: Now many sellers MUST sell, some even to survive after a job cut. Result: Prices plunging rapidly, altough with low sales volume.
Interest post; however i have to add; that i haven't read any lawsuits against so called bond rating agencies and bankers; anyway; when the first shot of law suits have fought out; meltdown time is over; or time to buy.
Since it will take years for the first suit to reach the courts, you will probably be right. The market should take awhile to bottom. Bottom line is rate cuts, lawsuits and the such will not save housing. People bought what they could not afford, PERIOD. They can barely maintain the teaser rate, and if the fed cuts 100 bps, they still won't be able to afford the reset rate. This country needs to stop the keeping up with the jone's craze, living WAY beyond its' means.
First and formost, the current housing crises is regional and not "National". Second, house prices in the median range (200k to 300K) are being impacted. The california meltdown and FL. Meltdown only hurts those who bought the top. Many home owners in cali have lived in their homes since the 90s and are still up % wise. Miami is the worse victom, due to major speculation. So Investors are getting killed far more than a home owner. Minorities are the largest group effected by the CDO crunch. Consumers will continue to spend and spend and spend, even with out their "Home Equity Loans". Lay offs and recession are here and will be for a while. But that will not snowball into your phase 3. Unemployment is 4.5 or so. So unless we see 8%, your phase 3 is non-sense. The Stock Market will fall, investors will hurt, smart ones have all ready exited and invested in emerging markets, gold and energy. e
there is a limited amount of people who want or can afford to buy a house majority of people buy only two homes in their lifetime as for speculators that is there problem if they can't find a greater fool. affordable home is actuall ya good thing as household debt is reduced for the long term