"Underwater Lock Down" redux

[blogger]

"Underwater Lock Down" redux

****This is a repost of an entry from last year. It explains why people keep on showing up, expecting a bloodbath, and then not finding one. Remember, the reason so many people love Hood River is because, by and large, we move along at our own, simple, easy pace. This can hurt us in times of expansion, but is very helpful in times of contraction.****


...Ok, My phone rang immediately upon that last post with a disgruntled Blog reader. This is what an "underwater Lock Down" is.

In Hood River, your average person buys, or owns a house. They get caught up in some of the market run up hype, but not in the way you might expect. Usually, they take out their new found wealth in the form of a refinance at the higher valuation, but they do not sell. Many of them don't do sub prime but some do. (Figure more than 60% don't) and here's what happens.

Market corrects, but the total negative impact on these people is that their payment is high and they've lost money....but only if they sell their home.

They decide that it's easier to sit tight and pay a couple hundred more dollars a month and wait for the market to recover.....so, they drive their cars a little longer, go out to dine a few less times per year, and generally trim back a touch....but they don't sell.

What does this mean to Real Estate? The these houses do not come to market.....which is effectively a return to the Real Estate market of 1996-2001.........general upside pressure, limited inventory, very little speculation.....

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