Quote:
Originally Posted by kr4l
You gotta think of it this way. If you owned a detached house that fetched $3mil right now, if the market dropped say hypothetically 50%, would you just be like, ok I'll just take $1.5mil and walk away? Maybe, if you couldn't afford the payments anymore and need to take a hit, but I'm pretty sure there will be a huge lineup at your door wanting to buy it. You've seen how much your place is worth at its high, no way in hell you'd give up that much money to sell. I'd rather wait it out again
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It doesn't work like that. The better hypothetical situation is. You bought a $3mil house. It dropped 15% in one year. Do you sell? No. OK it drops another 10% next year. Do you sell? No. It drops another 10% in 3 months. Do you sell? How many people could stomach this situation where they lost a few hundred thousand and wiped out all of their down payment and equity.
In addition, no one wants to buy in a down market. Would you buy a house that has been losing 15% year on year? That's what usually happens just like in a stock market crash. The people who can handle the swings ride it out, the majority gets slaughtered.