John Wake

High End Home Market Still Has Further to Fall

As an Arizona Realtor I don't know the New York market from Adam. I do know, however, that New York was pretty much the last market to join the falling prices party.

In a falling market you want to sell ASAP. The fact the Geithner barely moved on the list price guarantees that he will chase the market down.

He's not alone, of course. Most home sellers in a declining market are in denial. There is an amazing amount of emotion and self image tied to their home's value and they've already spent the profit in their head many times over.

A price reduction to the average home seller feels like a death in the family. So they don't reduce the price, they don't sell the home but they do ride the market down.

Rationally, he should reduce the price until he finds the highest price at which it will sell.

There is a huge amount of emotion tied to money. When it comes to money, even economic rocket scientists like Geithner make irrational decisions.

(To be fair, he may have decided that if he got his (unrealistic) price he would sell, otherwise, he would hold on to it for when he moves back to New York. Financially, however, he would have almost certainly been better selling sooner rather than later.)

Two Mortgage Markets Emerging from the Crisis

As soon as home prices stop falling, mortgage money will magically appear.

A possible problem with government efforts to support the real estate market is that their efforts may only delay the bottom and prolong the pain.