Analyst Chris Thornberg doesn’t think this is a bubble market, and suggested that you should go buy anything you can get your hands on.
While the current environment may have the same frenzy/intensity of the last bubble, there are three reasons it won’t blow up like it did last time:
1. Banks have learned to be flexible on foreclosures.
They figured it out – the houses being foreclosed today are those with some equity, and either the bank is getting their full pop at the trustee sale, or if they have to sell it as an REO they might make some extra dough.
2. The government is in full support of the housing market.
Tweak the accounting rules, throw money at loan-mod programs, lower rates, and literally tell the banks to not do anything to harm the economy. Uncle Sam has your back.
3. We learned that a surprising amount of people didn’t freak out over being underwater.
They have to live some place, and with some support from the previous two above, they survived.
If prices stabilize, Bernanke and his buddies will come out looking like heroes. We don’t really need prices to keep going up around here; in most parts of North SD County’s coastal region we are back to peak pricing or higher.
Prices will ebb and flow. But the vast majority of those who bought in recent years are in for the long haul, and won’t care about short-term fluctuations in value – at least not enough to panic-sell.