By the time the mainstream media figures it out, it's already too late. CNN Money/Fortune report:
“The great housing bubble has finally started to deflate, and the fall will be harder in some markets than others. The stories keep piling up. In many once-sizzling markets around the country, accounts of dropping list prices have replaced tales of waiting lists for unbuilt condos and bidding wars over humdrum three-bedroom colonials.”
“The message is clear. Five years of superheated price gains rescued America from stock market collapse, put billions in consumers’ pockets, and ignited a building boom that bolstered the nation’s economy. But it’s over. The great housing bubble has finally started to deflate.”
“Contracts are being canceled, deals are drying up, prices are starting to drop. The psychology is shifting even as thousands of new homes and condos join the for-sale listings each day, so the downward pressure will only get worse.”
“Things are suddenly looking very chilly indeed in four coastal cities; Boston, Washington, Miami and San Diego, as well as three Western boomtowns: Phoenix, Las Vegas and Sacramento. So far this year, monthly sales have fallen 11 percent to 25 percent in Miami, Boston, northern Virginia and San Diego.”
“The prognosis is even worse in Phoenix, where only 4,500 homes sold in the first three months of 2006, vs. 6,100 for the same period last year, and in Sacramento, where new-home sales plunged 57 percent in the first quarter.”
“The problem is as basic as beams and trusses: The triple threat of soaring prices, higher mortgage rates and relentlessly rising property taxes has drastically increased the cost of ownership and put many homes out of reach for a huge number of potential buyers.”
“With houses hovering beyond the reach of most potential purchasers, formerly frantic markets grow eerily calm. Sales shrink as buyers float low-ball offers, and sellers refuse them. Realtors and mortgage brokers find other jobs. The bubble areas turn into Dead Zones.”
“There’s no mystery about what it will take to close the affordability gap and bring the markets back to life: Prices will have to come down, and incomes will have to move up. The only question is how much of the adjustment will come from rising incomes and how much from falling prices.”
“Many individual homeowners have nothing to worry about: They can simply stay put and ride out the cycle. The only thing they’ll lose is the opportunity to brag about their paper profits. The real losers will be those who bought recently at inflated prices and are forced to sell, usually because they’re taking a job in another city or can’t make the payments when their adjustable mortgage rate jumps. And speculators who bought overpriced condos in hope of a quick killing are going to get hosed.”
