The way information spreads … You and I follow the news, or you wouldn’t be reading this. But most people get their information in different ways.
For example, many people are only now finding out that house prices have stopped rising, and are falling. Like this one:
Sagging sales, appreciation proof housing boom over,Over the summer, John Toole put his Woodland Hills home on the market for $1,695,000 and waited for a rush of prospective buyers.
And waited, and waited and waited.
So he offered a 15-day Hawaiian Islands cruise for two to the agent representing the buyer to stimulate some interest. And Toole waited some more.
He eventually slashed his asking price by $100,000. Nothing changed.
“It didn’t bring anybody around. Nothing. The market is absolutely dead,” Toole said. “I was amazed.”
This story goes on to talk about the last price drop,
Starting in March 1992, the median price fell on an annual basis for 37 consecutive months. In November 1995, it dipped to $155,000, the low point in that down market, 36.7 percent below the old record high.
Bubbles are followed by crashes. Prices adjust. It always happens. The 1990 housing price drop adjusted back to the mean. It took time – three years of falling prices. But that’s a “normal” real estate fluctuation. This is different. This is the biggest housing bubble in history. So economics would say that we have to see the biggest drop in history.
So the question is, how do we plan for where this must go? How does government help people out of it if we have a housing Katrina?