You reach a point in a market, we aren’t there yet, where only people who have to sell are selling. Builders with already built product, relocation companies, bank owned property. A portion of the price buys down the rate on the offered low financing. Per the math above, buying down the rate is cheaper than a price reduction, about half the cost. In the beginning of a down market there is more opportunity to do that, as appraisers use comps, meaning higher past sales. But if they wait too long, the opportunity is lost.

I do think there is pressure for government involvement as to reduced interest rates. Clearly the government was involved in lower rates after 911 to support the housing market. Remember, no one would do a thing to keep Seattle prices as high as they are. What will happen will be to help Detroit and Florida and Vegas and areas that are building up areas of empty houses. But what is done, gets done on a national scale, so the rich get richer and the poor get saved all in well fell swoop.

I imagine homeownership increased 2001 to 2007 due to people who ordinarily wouldn’t have qualified for a mortgage becoming homeowners. Some percent of those have lost the homes and probably reduced the homeownership rate. That percent probably isn’t coming back on the anytime soon though.

The piece this week is almost as bad as her all time worst one–the condo that wouldn’t sell at $660,000 that had just been purchased 4 months before for $600,000 (or some similar numbers).

Back in the day, 7 year was my preference, so lacking a good 30 year rate, I’d like to see a good 7 year rate vs. a 5 year rate. More practical for most people. 7 year spreads have not been good for many years, as they used to be. I’d like to see 30 year at 5.5%, 7 year at 5% and 5 year at 4.875% with virtually no spread on the 7 vs. 5.

I have not found that significant equity makes seller’s more realistic about wanting more than the last sale, even when the last sale was pre-peak pricing. Have you?

The smaller the developer the more “nervous” he/she is, and larger ones seem to want the spec houses gone more than lots, from what I am seeing. Some of the best choices are in “spec” houses that were built under contingent contracts, with the contingency expired and buyer backing out. Better lot choices in that group.