Inventory - Edmonton Housing Bust

Category: Inventory

Friday, April 16, 2010

Death Rattle

Over the last year, since the central banks of the world collapsed interest rates and provided a short-term game changer, I’ve been often asked when the real estate market would again turn down. To which I’ve replied it’s hard, if not impossible, to pin point an exact time, but I could tell you what it would look like… that being an inventory surge would signal the market turning.

So, knowing that, let me take this opportunity to state that I am now fairly confident in saying that we’ve arrived. The market turn is upon us.

That may seem like an odd statement, especially coming off the release of the March numbers which saw the biggest jump in average prices ever… but do not be fooled by the death rattle, that was the result of one final wave of dumb money and desperation, not of market forces. There could still be some upward drift left, these rallies typically have such blow-off tops… but all the legitimate market forces have turned, and are now pointing down.

We here in Edmonton know exactly what such a turn looks like… we’re not even three years removed from the end of the Alberta bubble. But then just as the bust was really taking root, interest rates were plunged and we ended up with a little suckers rally last year, one that took practically the entire country by storm. The rally was rather muted on the price front locally, as all the prior downward momentum saved us from setting new highs as much of Canada experienced, but it still goosed a market that was already over priced here. So, we made our hole wider, but not deeper.

Change in inventory is a great measure of a markets mood when it comes to buying vs selling, and while it is certainly dependant on seasonality, we know from history that such fluctuations are largely limited to within +/- 500 properties from one month to the next. That was true right up until the bubble burst in 2007… at which point the market started to cool and sellers suddenly flipped from reluctant to desperate and the market was soon flooded.

Soon that month-over-month change blew way past +500… and +1000… and +1500… before finally topping out around +1900, almost 4x anything that had been witnessed before. This didn’t just eke out a new record, this destroyed it… and sent inventory to levels never thought imaginable for Edmonton.

This massive upsides also resulted in massive downsides come each fall, but while the month-over-month changes swung wildly, the overall inventory levels remained extremely high. Then 2008 arrived, and the swings reverted upward again, and MoM changes against broke the +1000 mark, this eventually resulted in inventory blowing well past the 10,000 mark (broke 11K in fact)… more than double what even the record high had been prior to the boom/bust.

But then something interesting happened. Sellers realized they were flooding the market, and started to pull back listings. By the summer of ’08 listings were already starting to plunge, well ahead of when they normally did. Inventory remained historically high, but it looked like levels were dropping… this while sales tallies were poor, and the financial crisis turned poor into dismal, obviously not a result of actual clearing out.

Then we get to 2009, and looking the MoM graph again, and it looks positively normal from an inventory behaviour perspective. Largely back within the +/- 500 range again (other than December). This led some to conclude the market had re-entered balance, and this was just the “new normal”… while others, like myself, suspected this balance was an illusion caused by the interest-rate induced rally, that there was really a significant shadow inventory out there, and that when consumer sentiment shifted that the inventory problem would again rear it’s ugly head.

So, for the “new normal” crowd… this is where I say, “I told you so!”

As we can see, as soon as 2010 rolled around, inventory again started to take off, and surpassed the 500 threshold. I was hesitant to make any declarations in light of the January and February numbers, as while in excess of +500, it wasn’t by extreme margins and wanted to make sure it wasn’t just and anomaly caused by the recoil from fall delistings.

But with the March release of numbers, any doubt was removed… stick a fork in this rally, it’s done. And according to the preliminary April numbers, we’re in for another similar jump this month.

The same story also appears to be playing out in markets right across the country this spring. Even the CREA acknowledged the massive wave of listings, almost 100,000 nationwide. We in Alberta has seen this show just three years ago, we know how it plays out… now the rest of the country is going to get unfortunate opportunity to find out for themselves.

27 comments

Thursday, March 4, 2010

Inventory and Price

Filed Under: Historical Prices, Inventory

Still recovering from the Olympics hangover. As if having to go outside and face the sun wasn’t enough, apparently they expect me to be functional at work and interact with people in a civil manner… all the while going through nordic combined withdrawl. Yeah it’s rough.

Anyway, I’m busily trying to catch up on all the things I missed while in my little staycation. While reading through some real estate news items I came across one item talking about a suspected inventory pinch that will develop this spring in much of the country and would result in further inflation of prices.

Got me thinking tgat I hadn’t touched on that sort of thing in awhile, so it would be a good topic to cover. Beyond that, I want to look at the actual psychology of the market that causes this… and as here in Alberta we’re in a different phase of the bubble than the rest of the country, we have a unique opportunity to examine what happened here.

So, lets take a look at how inventory levels have recently co-existed with price levels. Here’s I’ve plotted out active inventory and the year-over-year change in prices (of the median SFH, using a 3-month moving average). Up until 2006 we can see a very intuitive relationship, fluctuations are moderate and we can see that generally when inventory is low, appreciation is higher… conversely when inventory is high, appreciation is lower. Particularly apparent in 2002 when there was a noticeable pinch in inventory and soon thereafter prices took off a bit before both returned to their means.

Then we look at what happened in 2006… the economy was cooking and real estate appreciation was strong in 2005 and as we know, the feds started to take the axe to lending requirements… and inventory started to get pinched, and prices went ballistic. Prices eventually topping out at almost 60% YoY appreciation all the while inventory remained at extremely low levels. Then just as suddenly those gains started to return to Earth and inventory went crazy.

Now, all that we knew and have discussed from all sorts of angles. What I would like to discuss is why.

In the midst of the boom, everytone thought that migration was just so great that the inventory shortage was legitimate (ignoring how preposterous the premise of running out of land in a city located in the middle of the prairies is, a mania is a mania, I guess). Buying and selling was the in thing to do, greed and fear were the prevailing emotions (and still largely are). It became a seemingly infinite loop, prices kept going up, which just kept feeding the beast, and a suddenly rapid expansion of available credit only served to throw gas on the fire.

So speculation ran rampant, and not just on the demand side, but also on the supply side. See, when prices are rising quickly sellers a lured in by the paper gains, and hold properties off the market. So, not only was demand artificially high, but supply artificially low… which of course results in further price escalation, and the loop just keeps reaffirming itself.

But that can only continue so long, and eventually the market reaches an absolute limit when the credit runs out… at that point, the music stops. First year-over-year gains start to slow, then month-over-month gains dwindle and eventually reverse, and this starts sucking the air out of the bubble and as first-time buyers have been priced out there is no fresh money to keep the gears turning.

As a result sales start to slow, and prices start to reverse course… this causes the speculators, who had previously been holding their properties off the market, to rush them onto it. This floods the market, and turns it into a “buyers market”… and much like in sellers markets, when sellers become reluctant to sell fearing they’ll miss out on the gains that could be achieved should prices go higher… in buyers markets, buyers become reluctant to buy fearing they’ll miss out on discounts achieved should prices go lower. Again, an example of a behaviour serving to reinforce itself.

But there is even further trouble caused by such an extended boom and increased speculative activity… that is, builders overbuild. New construction serves a very important purpose in balancing the real estate market in the long term, it maintains balance. But in a speculative bubble, demand increases artificially at the same time supply is decreased artificially… this means builders start pounding out new housing at a rate much higher than is actually warranted, and the longer it continues, the more overbuilt you end up. That’s how we ended up with inventory levels more than double any prior highs, and three times normal levels.

When the boom was at it’s peak many denied the existence of speculation, but one need look no further than the explosion of inventory in the immediate aftermath of the market cooling to prove otherwise. 8,000 units didn’t magically appear over the span of mere months (and rocketed even higher a year later), they were always there… a shadow inventory, if you will.

After the last year of credit fueled mania, we can expect the same effect to be witnessed in several markets across the country (to varying degrees)… if I’m correct, we’ll even see it here again, though probably not quite to the levels witnessed in ’07 and ’08, but significant none the less. Again proving that a market is no more rational than it’s participants… which in this case, is not very.

8 comments

Monday, July 20, 2009

Over/Under Supply

Filed Under: Inventory, New Constrution

For awhile now I’ve been thinking about trying to attempt to quantify the relationship between population growth and housing construction. We’ve been hearing for a year or two now about how our city is actually overbuilt to a significant degree.

This of course would come to a surprise to many as just three years ago there was an apparent serious housing shortage, and stories of tent cities propping up around the city. As it turns out that shortage was largely artificial and a result of speculative buying, and as reports such as this one from TD point out that we’ve actually been somewhat overbuilt all along.

So, today I decided to sit down and try to hammer out some kind of quantification for this… but I wouldn’t take any of this as gospel, it’s really more of a scientific wild ass guess then anything. Regardless, on with the show.

Edmonton Population and New Construction

This is just basically an overview of the stats from which the subsequent findings arise. So you can examine that at your leisure.

From this data I derived some long term averages and medians to attempt to make something tangible out of that mess. Basically what I found was that for every new unit completed you needed somewhere between a 2.1-2.3 person increase in population.

Those familiar with the censuses probably know that typically Edmonton and centres like it have somewhere between 2.5-3.0 people per household (FWIW, according to the Statcan numbers I have over the last decade Edmonton has came in at 2.73).

So you may be thinking this is the big “Aha moment,” and that that alone proves we’re overbuilt… but no. That would ignore all the redeveloping/rebuilding that goes on, which I think it’s fair to assume makes up that difference. I’m not in the industry, but just as a laymen, to say 20-30% of new construction would qualify as redevelopment/rebuilding sounds reasonable.

So, now assuming that 2.1-2.3 range is appropriate lets compare how many units would be needed to absorb that population increase vs how many units were actually completed over this period.

Estimated Construction Required vs Completions

So here we see the patterns formed by the yearly numbers (non-cumulative). No surprise, the completion numbers tend to lag the demand fluctuations… obviously it takes time to actually build the places. This also doesn’t take into account the relative inventory positions, for that we’d run the numbers cumulatively.

This, I think, is a much more telling graph as it gives a relative supply position (assuming something resembling balance in 1987 of course). It seems to give a believable pattern as one would expect some ebbs and flows as when demand is falling you’d see a large pullback in supply in subsequent years, and conversely when demand returns you’d see an overcompensation in the other direction as builders rush back in.

In any case, one would expect in balanced market conditions that the figures generally fluctuate around zero, which they do. Then we hit the boom.

What I find quite interesting is that the build up of over supply actually came about from 2003, 2004 and 2005… before the price explosion really hit. This was during a time when the market was hot and building steam but prices were still within historical means.

From 2006 until now the over supply has merely maintained… somewhere between 8,000 and 22,000 units if my factors are correct (personally I’d probably place it closer to the 2.2 curve if not a bit below, but that’s just me).

I suspect this pattern may be more due to under-reporting of migration early in the boom, thus oversupply was probably slower to build in actuality as the new construction stats are actuals whereas population/migration are estimates. Over the long term they’re adjusted to be correct, but in any given year they are prone to significant variance with what is actually experienced. But we have to go with what’s given, so I digress.

For arguments sake, lets say it’s in the 10-15,000 range. Which is a significant degree to be overbuilt, even with starts slowing it’s worth nothing that when this data cut off there were still another 11,400 units under construction.

Figuring that all in and the ratio of persons per household and that’s a couple years worth population growth even with zero subsequent starts, maybe even more as migration is slowing. It will take time to absorb all these new units, and it’s going to be a drag on the market.

Of course all that is assuming my little SWAG has any validity whatsoever… which I’m not sure I’d quite extend it, but I think it’s fair to declare it a good discussion piece at least.

15 comments

Monday, April 13, 2009

Seasonality

Filed Under: Historical Prices, Inventory, Sales

Hope you all enjoyed your long weekend. If it was anything like mine, it was likely full of sun and way too much refined sugar.

If you’ve been reading the releases coming from the various real estate associations, you may have noticed they are now talking up the month-over-month sales and price figures more so then they have in the past.

Traditionally they usually focused on year-over-year figures… but as those are coming in as declines as of late, they are referencing those less and less. Something of a marketing move, as they’re in the business of stimulating sales, and hearing about prices and sales going down doesn’t make their message very receptive to buyers or sellers.

As a result of this, it’s also increasingly being pointed out that month-over-month gains are actually normal in the spring, as real estate for whatever reason has a lot of seasonality. So today I’m going to take a quick look at the traditional seasonal movements of prices, sales and inventory.

The 100 value is the relative value in January… and from there it behaves like percentages. So 110 = 110%… so if the price was 200,000 in January, that value would be equal to 100… so 110 would be 110% of the January price, so 220,00.

Here we see how prices typically move through the year. The blue line is the historical trend, and as you can see it usually shoots up about 7% in the first half of the year before leveling off, then drops off a couple points in the summer, and ends the year up about 5%.

We can also see that over the last year we’ve severely deviated from the norm. In 2008 it tracked normally through March, then fell off slightly through spring and then really dove throughout the second half… and 2009 thus far has been an extension of that.

Here’s a look at how prices behaved during the boom relative to historical norms. In this case normal seasonality barely registers as a speed bump, and while the boom was on through mid 2007, normal seasonality was no predictor what-so-ever. Which has also been true thus far in the bust.

Basically, seasonality is no indicator of prices during a bubble. That said, it is noticable that during the downturn, spring still does appear to be the strongest period, and falls off from there. Which seems to indicate the second half of 2009 could witness a very big decline.

Here we look at sales. Similar pattern, but in much larger proportions. Sales continually improve through May (typically more then doubling the January tallies), then going back down the rest of the year.

In 2008 we can see that it tracked a closer pattern in sales then prices. This also holds true though the boom, so while the scales may change, the general seasonal pattern remains.

It’s also notable that 2009 appears to be gaining very strongly, but this may be more of a result of an overly poor January. Again though, it is tracking quite closely to the historical seasonality.

Finally we’ll take a quick look at inventory levels. Again we’re seeing levels track fairly normal curves, 2008 went a bit higher, and 2009 is shaping up to be lower.

On the other hand, during the the boom, and the onset of the bust it looked quite different. In 2006 inventory actually tracked the opposite pattern, and declined through to the summer. This obviously caused a inbalance of supply and demand, and really fed the skyrocketing of prices.

Then in 2007 it was a very different story when inventory tracked normally, then picked up, then did some skyrocketing of its own. Which then caused a glut of inventory, and halted then reversed prices. Obviously a very volatile period there in 2006 and 2007.

So, as we can see, we should not be surprised by sales increasing in the spring, and the real estate boards out there should enjoy trumpting month-over-month gains while they can, cause come summer they’re going to have to find something else as both month-over-month and year-over-year figures will be poor.

As for some April predictions, I’ve been working on some different models but they’re hardly perfect… but I’m a glutton for punishment, so lets throw out some numbers and see how I do.

As mentioned before during a bubble prices are kind of anyones guess, but I imagine they’ll hold their prices in April. Active Inventory I’m going to say will end April around 7,900. Sales I’m going to peg at about 1,700 for April.

Though that could be a ways off, on one of the local agent blogs they are citing the EREB claiming 574 sales already this month, which by my calculations would put us on pace for almost 1,800 on the month (there were 1,830 last April)… though in the paragraph prior they talk about how much things have slowed sales wise and gave quite a low tally for the week.

So, in conclusion… who knows?! Time will tell.

13 comments

Wednesday, February 11, 2009

Lies, Damn Lies, and Statistics

Filed Under: Inventory, Sales

When I first started looking at the litany of stats released every month by the various outlets, it was kind of overwhelming. There are dozens of different measures, examining things from just as many angles. Even with my background in accounting and statistics, it was kind of wild.

But as I’ve worked with the numbers, and seen how they interact, I’ve found an increasingly select few stats that are actually relevant… and conversely, a growing list that are not worth the paper they’re printed on. So today I figured I’d take a quick look at the more commonly reported stats, and offer my takes on which are the wheat, and which are the chaff.

I of course reserve the right to later change my mind and completely contradict this post, when or if it becomes convenient.

Good Stats

Median Price – This I find to be the most accurate reflection of what the “average home” is worth. I don’t want to bore you with the mathematics of it, but if you follow this link you can read up on just how medians are found, if you don’t already know.

Sales – A very straight forward measure, and tells you just how many units are sold.

Active Inventory/Listings – Another straight forward measure. As its name suggests, it tells you how many properties are listed at any given time. Not always widely reported here in Edmonton, but it can always be found in the Quarterly Stats packages on the EREB site.

Between those three stats alone you can get a very good overall picture of what is going on in the real estate market.

Occasionally Interesting Stats

Average Prices – Probably the most widely reported stats, unfortunately I don’t think it’s as good a measure as median prices. I feel this way because it can be skewed a bit. For example, if in February there are 999 homes sold for $300,000 each, and one sold for $5,000,000, we end up with an average price of 304,700. So while the number might not be way off, you can see the potential for a couple high end sales to really throw off the number, especially since sales in that category can be somewhat sporadic. That’s why I prefer the median figure because I think it gives a more accurate idea of what the “average home” is worth, rather then the “average of all homes.” Though because, at least here in Edmonton, they only give average prices for condos and townhouses and not the medians, it is unfortunately the only figure available, thus it is a necessary evil to discuss them.

Days on the Market – I was tempted to put this one in the “Completely Useless” pile, but I decided not to. My problem with this stat is the way re-listings restart their clocks once they expire, which obviously will skew the data, especially in times like now when we have large inventories and a lot of expiring listings. Though, while their figures are muted, they do seem to give an idea of the general health of a market.

Completely Useless Stats

New Listings – We hear a lot about this number, and some people just love it, using it in all kinds of ratios and such… but I think it’s as useless as tits on a bull. Because of the way re-listings are included, it’s a totally bogus stat. If you want an idea of how inventory is tracking, just keep an eye on active listings and sales, that’ll give you a much better idea of what’s out there.

In conclusion, in my not so humble opinion, if you keep your eye on median price, sales and active inventory over time, you should have a pretty good idea of what is going on in the market. Most of the rest of the numbers are just static, but if you want to know how the condo and townhouse prices are doing, those average prices can be used as something of a jumping off point.

6 comments

Thursday, February 5, 2009

Where do they go?

Filed Under: Inventory, Sales

Those that follow the stats released by their local real estate boards may have noticed that their inventories don’t seem to add up.

For example, at the end of December in Edmonton there were 6,316 units in inventory. Then in January there were 2,443 new listings, and 730 sales. Doing the quick math, 6,316 + 2,443 – 730 = 8,029, one would expect they’d have 8,029 units in inventory at the end of the month… but they only had 6,573.

So where did those 1,456 units go? Well, simple answer is they most likely expired, or were otherwise cancelled or withdrawn. When people sign on with a realtor to list their place, it can be for any term, many are for three or six months, but some can be for years. If that time passes without the property being sold, the listing expires and it’s up to the prospective sellers whether they want to re-list or not.

And getting back to the January totals, the truth is that in all likelihood there weren’t even 8,029 properties involved. As many would be counted twice in that figure if they expired and re-listed in the same month.

While the exact numbers aren’t included in the EREB stat packs, they are not hard to calculate since we have all the other relevant information. On another site ran by a local realtor they include such figures in their weekly updates. As you can see from charting out their figures there is always a big flood of expired listings at the end of every month.

So obviously most people sign on to list until the last day, or last business day of any given month. We can also see that come calendar year end there is an even bigger spike, probably just cause its a more significant date. While the spikes during the spring are a bit lower… probably a combination of the increased sales as well as people wanting to make sure they’re listed through the traditionally hotter sales season.

While that graph nicely shows the monthly cycle, it doesn’t really do anything to show a historical context of our current position. For that I’ll graph out the monthly totals for the last eight years.

If you’ve been following this blog, you may have noticed that the pattern followed by the Expired/Cancelled Listings is actually quite similar to that of inventory over this period. Which shouldn’t be surprising though, since obviously with increased inventory, you’re going to have more listings expiring, or corresponding decreases.

As you can see, during the boom sales rose and very few listings expired. Then as soon the market cooled, the number of expired listings quickly escalated, and much like inventory, reached record levels. Now the troughs remain at levels that the peaks didn’t even reach while the market was balanced. We now average over twice as many listings reaching their expirations as we traditionally did.

Another somewhat related stat is that of Days on Market, which is a measure of the average days a listing stays on the market before selling. I’ve charted that out here.

A correlation between D.O.M. and Expired Listing appears quite positive. Not surprising, during the boom D.O.M. were at record lows. A couple months in the first half of ’06 they reached their absolute low of 19. Now it has rebounded and is setting records at the opposite end of the spectrum, hitting 68 just last month.

Trouble is that with the number of expired listings being as high as they are, they may be further skewing the D.O.M. stat. Many units that expire get immediately re-listed, new MLS numbers and the clock starts over, so when/if they finally do sell the number is much lower then it actually should be. Thus the average D.O.M. may actually be significantly higher then they already are.

In any case, we can see from the elevated numbers of expired listings that there are still a whole lot more people looking to sell then are listed in active inventory. Whether they immediately re-list, or hold off for a few months, they’re out there and we’re a long way from supply and demand coming into balance.

3 comments

Wednesday, January 14, 2009

Topic du jour: Absorption Rate

Filed Under: Inventory, Sales

Assuming you read the title, you probably have already figured out I’ll be taking a look at Edmonton’s absorption rate in today’s entry… well done, go get yourself a hero cookie!

Many of you probably already know what absorption rate is, but for those who don’t, it’s basically just a measure of inventory turnover. Take the active listings at the end of a given month, divide that by the number of sales in said month, and voila, you have the absorption rate. So, in a nutshell it’s the number of months it would take to completely turnover the existing inventory at present sales levels.

There is no one definition of just what absorption rate constitutes a buyers market, sellers market or a balanced market, but for the sake of this post we’ll go with the CREB‘s take on it, since Calgary is pretty close to Edmonton when it comes to proximity, size, and government. They consider a sellers market to be 0-2.0, a balanced market to be 2.0-3.5 and a buyers markers to be 3.5 and beyond. Now, onto the show (as always, you can click on the image to get a look at a larger one)…

That was a look at the absorption rate in Edmonton over the last eight years. For the first five years it was fairly well balanced, sustained moderate fluctuations within a point into buyers or sellers territory, but generally stayed in the balanced range…

Then came 2006, and all hell broke loose. A major sellers market was established as the rate dipped well below 1.0 at a point and remained below 2.0 for over a year… then took off in the opposite record, blowing away all prior records and leaving us in this extreme buyers market where even relatively large dips in the rate still leave it well in excess of the prior record highs.

Now lets take a look at how this interacted with price, again we’ll use the median price for a single family home in Edmonton as our measure of choice…

As you can see, up until ’06 prices experienced a gradual upward trend as the absorption rate hovered around a balanced market, but as soon as we saw a deep and prolonged sellers market develop prices rocketed.

Trouble there being that attracted a lot of speculation and monumental construction as everyone tried to get their piece of the windfalls… and resulting from that the market ended up flooded when more and more people started getting priced out, sales started dropping but listings kept coming. The artificial demand caused not only prices to increase at an unsustainable level, but has also left the city significantly overbuilt… all of which adds up to an extreme buyers market.

Now a year and a half later we’re left with record levels of inventory, slumping sales and as a result, and incredibly high absorption rate. So basically now all that’s left is for price to drop, as that’s the only thing that is going to be able to start clearing out all the inventory. Until we reach something remotely resembling a balanced market we’re not going to see any increase in prices that add up to anything more then an aberration.

3 comments

Tuesday, January 13, 2009

Interplay

Filed Under: Inventory, Sales

Today we will take a look at the relationship between inventory, listings, sales and price. I took the Edmonton stats for residential new listings, active inventory, monthly sales and monthly SFH median price and plotted them out. I’m using the median price because I think it’s the best measure of what the “average” home went for in any given month.

You’ll definitely need to click on this one to get a better look.

There are several interesting observations one can make from this chart actually. First I guess we’ll start with ‘New Listings’ and ‘Sales’. You can definitely see the seasonality of those two, seemingly bouncing every December/January topping out each spring then doing it all again (though, contrary to popular belief, prices don’t appear nearly as susceptible to such seasonality).

The lows seem fairly constant over time, but the highs seemed to pick up a bit for ’03-’05 and increasing inventory. Then sales spiked to record levels in ’06, new listings were fractionally lower and active inventory was quickly eroded… that combination triggering the skyrocketing of prices.

In ’07 suddenly we saw a massive increase in new listings, which when sales increased relatively kept prices rising… but that seemed to be when the market hit it’s breaking point price wise, suddenly sales plummeted but the listings kept coming and as a result the market was quickly flooded with record amounts of inventory (IMO resulting largely from speculation/overbuilding during the “boom”).

Since then prices have slowly been falling, and sales have returned to more traditional levels. But there is now a massive glut of inventory, which even during the seasonal troughs, have remained way above anything ever experienced pre-2007.

Judging from how 2008 played out, I suspect we’ll see another big spike of new listings/re-listings. Sales will quite likely drop off to lower levels then last year, thus already high inventory levels will just keep rising and prices will continue to drop… when foreclosures start becoming more common, further driving down “market price” and sooner or later the reality finally sets in for sellers that their homes aren’t worth nearly what they think they are. We could see some very significant drops in prices as sellers start trying to beat the bottom.

The supply and demand market forces themselves would have been enough to cause eroding of prices, but that combined with the global recession/credit crunch, and it’s seemingly a recipe for pain.

1 comment