ReEconomist

How Much Further Will Housing Fall?

The reasoning behind this analysis is right on.

However, all of the expert analysis assume borrowers will want to borrow the maximum amount of money a lender will give them.

What would happen to prices and the market if borrowers became more conservative on their home purchasing and instead of borrowing everything they could, spent much less on housing?

During the boom, the atmosphere was housing was a can't miss way to get rich and home buyers wanted all of the purchasing power a lender would give them, cause they wanted in on the boom.

Now, in 2008 buyers realize home prices can go down and leverage can work against them. Equity and mortgage paydown is back in style.

To get an idea of top and bottom home prices for a particular zip-code check out Home Price Ceiling and Floor fundamentals at
www.ushousingmeltdown....

The Ceiling is the top end of prices based on home price to income levels and the Floor is the bottom level of prices based on their value as income producing assets. The larger the spread between Ceiling and Floor the more vulnerable prices are. The smaller the spread the more stable prices will be.