Love this sentence.

I am also figuring a couple of years or more. Just based on the experience of the 90s. Is the situation right now really better than in say 1990? The prices are still too high, IMHO; not all ARMs converted yet, not all “teaser” rate periods ended (did they?); the cost of renting is still significantly smaller than the cost of buying comparable property at least around here.

At least around here in Westchester there is still room for prices to come down: I just cannot take one bedroom condos for 300K seriously. Even 400K in a new tiny complex they built in my town a year or so ago and cannot sell. Isn’t that a surprise: they wanted 640K for a two bedroom townhouse and 420K for a one bedroom. I walked by last year and they had the open house; couldn’t resist to look at it for remodeling ideas. I hated the layout. I mentioned to the realtor that there are better and cheaper complexes in town and he said “but this is new”. True, and they are located in 5 minutes walking distance to our MetroNorth train station – good for NYC commuters. Still, this is a ridiculous price. As far as I know they only managed to sell a couple of some 15 units. The realtor called me after my visit and left a note that they reduced the price on a townhouse to 620K. As if this would help. I like my place better anyway.

We haven’t even been hit by foreclosures that much yet. Not as much as California. Maybe there is something special about NYC proximity, but it didn’t help during the 90s.

However, one Realtor of my acquaintance, a guy with an MBA and a couple of successful small businesses behind him who came out of early retirement to sell & invest in residential properties, says that in our area (Phoenix, AZ) we have more than two years’ worth of inventory on the market. More is accruing as we scribble, between young workers who have been transferred and need to sell, boomers who want to retire and downsize, and the many holders of now-unaffordable ARMS used to purchase houses at inflated prices.

Assuming (without holding our collective breath) that the government does something to bring the present fiasco under control and it takes effect in a year, it will take another three years to clear the back inventory (bare minimum) and another two years for the market to return to normal. That would give a best-case scenario of six years to recovery.

Personally, I’m figuring on ten.

I wonder how many of the homes purchased are from new home owners, I think that is a far more accurate way in determining the market then total sales.