11-16-2006, 08:15 AM
quote:
Would I rather sell twenty $250,000 homes or five $600,000 ones? Gee, that's a no brainer. In comparison to many places, we're still cheap. Lots of people can afford $250,000 homes. Not many can afford $600,000 ones, so I can sell the heck out the $250,000 ones.
But how will your bottom line fare? You may sell more homes at lower prices but won't that cut into your margins? Declining prices would have the effect of scaring off buyers no matter what the price level. What about all the property you bought as investments?
What you are talking about is the bottom. AFter prices have declined to the bottom they can only go up but the bottom may not be reached for some time.
If what you say is true, you should be cheering about the recent decline in prices and hoping for even lower prices but you aren't are you?
This is what I think will happen. The bubble won't burst all at once but will deflate like a tire with a slow leak for years to come. Every year will bring slightly lower prices than the last until we reach the bottom. Buyers will buy thinking the bottom has been reached but prices will keep going exruciatingly lower year after year. After that I expect another boom period. I could be wrong about all this. I'm not so self-assured about my opionions as some of us are.