3 ms·

I think it's worth acknowledging the mental lag involved in falling home prices. If you are selling a house in SF, you're not going to sell for 50% below what

I think it's worth acknowledging the mental lag involved in falling home prices. If you are selling a house in SF, you're not going to sell for 50% below what the market was in Feb, six months into this crisis. Ever. It doesn't matter what the buyer thinks the fair price is -- that house is going to stay on the market for a while. Even a 5% drop is 50k or 100k at current prices. That HURTS to admit. Expecting someone to sell a house at -30% is crazy, if they have any hope of a market recovery. It will drop 5% at a time, as inventory piles up, and sellers a year into selling realize -- maybe they're not actually going to sell that house at the price they expect. Or hey, maybe none of this will happen, and the market will rebound by January. Who knows.

hkmurakami 6y ago
This is assuming the seller can maintain the carrying costs of the house, an assumption that is currently holding true.
- dredmorbius 6y ago
  Which is a reason for downward-sticky moments to end in a capitulation: psychological denial prevents early sale, liquidity crunch and insolvancy necessitates a later one. Even non-distressed asset classes can be swept up in the quest for liquidity, an observation of J.K. Galbraith's in The Great Crash: 1929.
- bluGill 6y ago
  The few who can't are those who sell for 5%, supply and demand, price drops make the supply drop. Those who can afford carrying costs seems to be selling but in practice are not because they won't accept any offers.
claydavisss 6y ago
You don't put your home up for sale in a falling market unless you understand where the market rate is headed - your realtor will surely discuss this early on. Home owners who "hold the line" on their home value don't have a FOR SALE sign posted during a recession! For those that are selling in a dismal market, they have surely accepted the new market dynamics. Look at it from a buyer's perspective - there's just no reason to overpay.

hkmurakami 6y ago

This is assuming the seller can maintain the carrying costs of the house, an assumption that is currently holding true.

dredmorbius 6y ago
Which is a reason for downward-sticky moments to end in a capitulation: psychological denial prevents early sale, liquidity crunch and insolvancy necessitates a later one. Even non-distressed asset classes can be swept up in the quest for liquidity, an observation of J.K. Galbraith's in The Great Crash: 1929.
bluGill 6y ago
The few who can't are those who sell for 5%, supply and demand, price drops make the supply drop. Those who can afford carrying costs seems to be selling but in practice are not because they won't accept any offers.

claydavisss 6y ago

You don't put your home up for sale in a falling market unless you understand where the market rate is headed - your realtor will surely discuss this early on. Home owners who "hold the line" on their home value don't have a FOR SALE sign posted during a recession! For those that are selling in a dismal market, they have surely accepted the new market dynamics. Look at it from a buyer's perspective - there's just no reason to overpay.