The "All-Powerful" Bubble Sitters

From the Sacramento Bee (hat tip Jeff):

With a cool and steely patience over the past year, John and Toni Daniels have waited out a capital-area housing market buffeted by oversupply and price depreciation. They've resisted every call from a real estate establishment that says this is the time to buy. Now comes a new factor to reward their patience: the growing fallout in Sacramento from subprime lending. For the Danielses, holding a powerful upper hand in a game of supply and demand, subprime's spiraling turmoil may be one more reason to hold out for lower home prices.
...
Rising subprime-related foreclosures are pushing more houses onto an already overcrowded market. Tightened credit standards for all loans, not just subprime, are shrinking the buyer pool.
...
[N]o one knows exactly how the subprime fallout will affect the Sacramento market or the U.S. economy. But clearly, what started in March as a focus on people with bad credit has morphed into something larger, a psychological and investor malaise that dominates the whole housing market debate.
...
Analysts and industry experts can speculate all they want about subprime lending's effects on a housing market or the U.S. economy, but it still comes back to Sacramento homebuyers like the Danielses. John Daniels says he's heard the subprime "horror stories." He says he can only assume they won't help the capital's housing market. "We're watching prices of houses that we've seen on the market for a year," he says. "They've gone from $350,000 to $275,000 to $260,000."

Real estate executives say no one can guess the bottom. The Danielses have waited a year through record oversupply and now the spreading local fallout of subprime lending. They can wait a little longer. They have both the money to buy and the upper hand in negotiating. "It makes no sense for us to jump into something while prices are falling like this," John Daniels says. "Everybody wants the best deal possible. That's what it is."

Julie Jalone in Roseville & Rocklin Today:

I agree with Jim Wasserman, being a buyer with good credit in this market is a nice place to be but it also may be a reason to wait a bit longer. I know most people don’t understand what subprime means let alone the crisis in the mortgage industry that these loans have caused. But the constant media attention and reports of declining home prices make many stay away. As long as that happens prices will fall.

From the North County Times (hat tip Neil):

Let me begin by passing along my congratulations to the many people who are celebrating the current situation in the housing market. In concert with much of the national and local media, they have been able to artificially construct something that has never ---- I repeat, never ---- been done before: drive down housing prices at a time when unemployment is low, the economy is booming and consumer confidence is approaching record highs.

NC Times reader Leo responds:

This alone tells you that the real estate boom of the past few years has been a speculative bubble. Driving down prices by psychology alone is only possible when prices are supported by psychology alone. That's what a bubble is."

From CNN Money:

The binge that many housing markets went on in the early- to mid-2000s is over, and some of the hottest markets like California are now experiencing the worst hangovers...Stockton, California now leads the nation in foreclosures. Of RealtyTrac's top 10 metro areas for foreclosures, four are in Central California...Stockton recorded one foreclosure filing for every 27 households during the six months ended June 30, a 256 percent increase compared with the first six months of 2006.
...
The other California cities in the top 10 were Riverside/San Bernardino [#4] (one in 33, up 198 percent), Sacramento [#5] (one in 36, up 231 percent) and Bakersfield [#8] (one in 47, up 222 percent).

From USA Today (hat tip Jeff):

For evidence of what is spooking Wall Street and wreaking havoc on the mortgage industry, one need only look at the housing market in Stockton, Calif., 40 miles south of Sacramento. During the real estate boom, Stockton was a hotbed of speculation, bidding wars, and rocketing prices. Now, foreclosures are soaring, sales are plummeting, and there is more than a year's supply of homes and condos on the market.

The housing market "is still sliding," said Larry Underhill, president of the Lodi Association of Realtors, which covers Stockton. "The buzz is there is just a ton of foreclosures, and banks are going to own a lot more property before it's over."...Underhill says he's seeing homes go under contract two or three times, and each time, the deal falls apart because "buyers can't qualify, or buyers are understandably cautious. They see property values sliding and are saying, 'Why am I doing this?' "