It’s not nice to say “I told you so,” but I told you so.
The housing bubble is bursting with a vengeance, even in the Bay Area. Almost 50% of home sales are from forclosures, up from 10% last year.
Last month 47.6 percent of all homes that resold in the Bay Area had been foreclosed on at some point in the prior 12 months, up from 44.0 percent in October and 10.1 percent a year ago.
I think my very first bubble post sums things up nicely:
When the end comes, it will be swift. At first, it will be a small thing. A number of buyers will be forced to sell their homes when interest rates rise and the principal repayments begin. When they go to sell, they’ll find that demand is tapped out. As a result, home prices will begin to drop. As more homes come onto the market, the prices will continue to drop. As prices drop, nervous homeowners who see their equity eroding will rush for the exits, hoping to sell and lock in profits. As homes flood onto the market, prices will drop. As homeowners find themselves unable to make payments and unable to sell their homes, foreclosures will rise. Those houses will come on to the market, lowering prices further, convincing more people to sell, and so on.
And on the day when the newspapers and magazines are running articles about “The Death of Real Estate,” I will buy a house.