Could enough cheerleading about housing turn into a self-fulfilling prophecy? 

My dear readers of are too smart to fall for it, but there are only a couple of thousand of you.  What about the rest – the ones who listen to Cramer, read promising headlines, and rely on typical realtors?

Cramer’s rant this week about his latest bottom call:

Cramer is a buffoon in most people’s eyes, but many homebuyers are tired of waiting – will they compromise on price or quality when they hear that it’s time to get in?  Or how about his comment that the banks are flush, and can hold back REOs?  Does that erode your confidence that free markets will prevail?

This is a continuation of the comments from the last post, which I really appreciated and wanted to continue.  Specifically, that the vast majority of homebuyers who aren’t as studious as you, are the ones making the market today.  They are the ones out-bidding you for REOs, buying other non-REO houses at mind-numbing high prices, and spoiling it for those patiently waiting for normalcy.

Or is this as normal as it’ll get, with manipulation gumming up free enterprise?

Dawg is right, of course, that nobody knows for sure, and there’s no telling how it’ll turn out.  But let’s explore a hypothetical case.

If over the next two years you saw the banks dribbling out one by one their REOs in your target area, and enough demand to gobble them up and more, at what point do you quit waiting?  Let’s add that mortgage rates somehow stay between 5% and 6% – is there a point where you’re going to give up on logic and compromise on price/quality?


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