The Housing Bubble

CNN Money reports on California. “Five of the cities on the Bottom 10 list are from this region, making the long rural stretch of Highway 99 between Sacramento and Bakersfield look like a treacherous real estate ditch. ‘A market where housing has increased by so much so fast when unemployment is that high is unsustainable,’ says Frank Owens, who sits on the board of Fresno’s builders association. ‘This market is going south.’”

The Fresno Bee. “Real estate agent Twyla Smith is trying to promote herself in what has become a sluggish real estate market. It’s her way of trying to stand out from the throngs of agents who got into the field when the market was red hot and who now find themselves scrambling for business as home sales decline.”

“She got into the real estate business four years ago. So did hundreds of thousands of others looking for sure money. There are plenty of homes for sale and potential home buyers, but properties aren’t moving as fast. For Smith, that means her income is more uncertain now. ‘I have only been used to the booming market,’ she said. Now, she said, ‘you have to work harder.’”

“Now, her name and telephone number is on the sign outside the north Fresno home of Mike Kadrie, who had been trying to sell his home on his own since June with no solid offers.”

From Inman News. “Prudential California Realty is ‘rightsizing’ in recognition of the market realities of slower sales, said Sherry Chris, the company’s COO. ‘All companies are looking at what the right things to do right now are. We’re rightsizing our company, looking at cost-containment opportunities and growth opportunities,’ said Chris.”

“Chris said that the market conditions will present special challenges for the huge group of agents who are relatively new to the industry, and there likely will be a decrease in the agent population over the next 18 to 24 months. ‘This to me is a market correction. It’s just a leveling out of the market. It’s not a downturn that is going to be going on for an extended period of time,’ Chris said.”

The LA Times. “Carl Christoph Nuechterlein plunged into a real estate career in 2004. He’s now folded up his tent, not much richer for the effort. ‘Sales volume dried up,’ said Nuechterlein. ‘I wasn’t making enough money.’”

“‘About half of our Realtors today have been in the industry only four years or less,’ said said Leslie Appleton-Young, the group’s chief economist. ‘Many have not experienced a downturn and find it challenging.”

“Although current data do not reflect a drop in licensees yet, there typically is at least a two-year lag between a market downturn and a drop in new and renewed licenses, according to the California Department of Real Estate, history tells us a fall will come.”

“Nuechterlein found the business a tough slog from the get-go. He had a job earning up to $60,000 a year in commissions, but like so many others he thought he could make an easier buck in real estate. He found his niche in Hemet — a small, mostly blue-collar town in Riverside County.”

“Taking a smaller commission assured him a fair number of sales, but he wasn’t rolling in income. When the market started to slump last winter, he decided to unload his own home and lived for a while on some of the $53,000 profit. It didn’t pan out. When the slump intensified, he quit and found other sales work.”

“Agents who’ve experienced Southern California’s up-and-down real-estate cycles say the housecleaning eliminates some of the fly-by-night and discount brokers. ‘A falling market can freak you out or give you an opportunity to do better,’ agent Syd Leibovitch said.”

From Origination News. “The California Association of Mortgage Brokers has issued a ‘best-practices guide.’ The guide calls for: uniform licensing standards with mandatory pre-education, continuing education, and criminal background checks for all loan originators; the enforcement of existing abusive lending laws; workplace efforts on integrity and consumer education.”

“Michael Faust, the CAMB’s government affairs chairman, said the guide grew out of the recent dialogue over nontraditional products and abusive lending practices. But that dialogue, he said, ‘has broken down, with everyone taking their sides and screaming their interest points as loud as they can,’ affecting the ability to reach a compromise.”

The Central Valley Business Times. “More than 37,000 homes went into the foreclosure process in California in the third quarter, a 171 percent increase over the same period in 2005, according to an Irvine-based foreclosure information company. The California number was up 35 percent from the second quarter of 2006.”

“”What our third quarter research appears to be showing is that the first wave of adjustable rate mortgages is having a negative impact on the number of homes going into foreclosure. With the volume of these loans, more than $1 trillion of them due to adjust over the next 15 months, this is a trend that definitely bears watching,’ says James Saccacio, CEO of RealtyTrac.”

The North Gate News Online. “The National Association of Realtors caused a stir in the real estate community recently when they released a statement saying that nationwide home sales and selling prices fell in August compared with the same month last year.”

“But San Francisco real estate professionals tend to balk at the findings and insist that the numbers do not apply to the city.”

“References to numbers about declining prices coupled with talk about good sales have made potential homebuyers uneasy. Scott Shapiro, who works in in Novato, currently splits a $2,500 monthly rent for a Russian Hill apartment. He said that about six to nine months ago he started to look into purchasing a home, albeit casually.”

“Shapiro said that he is ‘apprehensive’ about buying a home in San Francisco. In addition to the exorbitant price tags he encounters—ranging from $775,000 to $1.1 million—he wonders about the soundness of an investment in property at this point.”

“Through August 31, average prices for one-bedroom, one bath condominiums have actually dropped from $580,000 to $573,000. These kind of numbers make Shapiro want to take his chances and wait a while longer. ‘I think there’s a more market left to drop,’ he said.”

The New Mexico Business Weekly. “Albuquerque’s housing market peaked in July, according to sales data. After merely slowing in July and August, sales took a dive in September, when home sales were down 17 percent compared to the same month in 2005. Perhaps more ominous than slowing sales, or possibly because of them, is the increasing number of for-sale signs sprouting in front of everything from Westside tract homes to custom-built residences in the NE Heights.”

“The inventory of existing homes on the market went from 2,319 a year ago to nearly 4,700 this October, according to the Albuquerque Metropolitan Board of Realtors.”

“Some solace can be found in the fact that prices are apparently holding. But agents say prices are now dropping, especially at the luxury-end of the market above $500,000. Anything over $1 million is an especially tough sell. Buyers are moving to the sidelines, agents say, and are waiting to see where the market bottoms.”

“‘The last couple of years, you could place a sign out front and it sold. With twice the number of properties on the market now, sellers have to price it right and it has to be in great condition,’ said Greg Lobberegt, an agent who works the NE Heights.”

“National influences are taking the steam out of housing here. Increases in mortgage rates have taken some buyers out of the market, but there other issues. Speculative investors who were buying up homes in Westside subdivisions are disappearing, moving on to Texas where starter homes are cheaper and appreciation might be higher, brokers say.”

“California’s weak market also is hurting Albuquerque. People there can’t sell their homes and that is reducing the flow of new residents and cash into this market, says Seth Jacob, a veteran East Mountain agent who brokered several sales to Californians earlier this year.”

“‘I just lowered the price of two of my listings in the NE Heights and in the mountains. I’ve seen a lot of price reductions, particularly in the higher price ranges. Things are sitting longer,’ Jacob says.”

“Bankers also are seeing the slowdown. ‘We’re entering a challenging environment right now. The more people read the national media stories about the housing downturn, the more they shy away from making commitments. The more stories they do, the more the consumer says, ‘I ought to wait if the market has peaked,’ Charter Bank’s Lyle Greenberg says.”

“Developers plan thousands of new residences over the next five years, especially along the I-25 corridor. Real estate agents are hoping that banks put the brakes on construction lending to slow the tide of home building. Bankers say developers will slow down if the market drops.”

“‘Demand has slowed and the builders will back off a little,’ says Rick White, head of Compass Bank’s real estate construction and development group. ‘I’d be a lot more nervous doing what I do if I was doing it in Phoenix.’”

The Denver Post. “Carly and Todd Zody got way more than they bargained for when they bought their home in the Villages at Centennial. The couple were set to buy a townhouse when KB Home offered to sell them a larger duplex in the same neighborhood for the same price, plus $30,000 in upgrades.”

“‘The base price on the duplex is $20,000 more than on the townhomes,’ Carly Zody said.”

“In the past six weeks, KB Home has sold 81 homes at discounted prices. It still has 53 homes it wants to unload at discounts of as much as $20,000 each, and it will pay closing costs. ‘We typically don’t have a lot of these,’ said Rusty Crandall, president of KB Home Colorado. ‘I think all the builders have a few more inventory homes on the market than they’d prefer because of the cancellation rates we’ve seen. There are some great values out there for customers who are interested and have the capability of moving in quickly.’”

“In addition to upgrades and other incentives, KB has been holding promotional events in all its neighborhoods, where its inventory homes are offered at sharply discounted prices.”

“The competitive homebuilding market also has caused MDC Holdings, parent of Richmond American Homes, to be much more aggressive in its incentives, particularly on already- built inventory homes, said president David Mandarich. Village Homes is likely to start offering package incentives to real estate agents to sell the inventory homes quickly, said Jennifer Lambert-Pingrey.”

From CBS 4 in Denver. “Weld County was one of the hottest housing markets in the country, until two years ago. ‘At the very best, we’re flat,’ real estate agent Matthew Revitte told CBS News correspondent Sharon Alfonsi. ‘And we could be perhaps contracting.’”

“Revitte sold many homes before oversupply and rising interest rates torpedoed the market. ‘We’ve yet to hit bottom,’ he said.”

“Homebuyers with adjustable rate mortgages faced payments they couldn’t afford. Those forced to sell couldn’t find buyers and hundreds defaulted on their loans. Now Weld County leads the nation in foreclosures, 1 in every 168 households. That’s 700 percent higher than the national average. ‘Almost overnight it’s like somebody turned the lights off,’ Revitte said. ‘Now we are going through the great correction.’”

“While the emotional toll of foreclosure is personal, the financial impact is shared. You can expect your home value to drop $10,000 or more if a neighbor defaults. ‘I don’t think the circumstances here in Weld County are that unique to what perhaps could happen in the rest of the country,’ says Revitte.”

Some housing bubble news from Wall Street and Washington. Paul Muolo, “Speaking before the National Association of Home Builders last week, Countrywide Home Loans chief Angelo Mozilo voiced his concern that some states may dictate ’suitability standards’ that could force mortgage bankers to make loan choices for borrowers, a proposition he finds alarming.”

“Preliminary survey numbers are starting to roll in, and it’s looking like the third quarter was a challenge for many lenders. Meanwhile, according to exclusive research conducted by NMN, payment-option ARM and interest-only loan production now accounts for almost 30% of industrywide fundings.”

The Washington Times. “The Commerce Department released dataMonday, on U.S. personal savings. The savings rate, personal savings as a percentage of personal disposable income, was minus 0.8 percent, 0.5 percent and 0.2 percent in July, August and September.”

“‘With housing prices falling and household wealth shrinking, savings should continue to improve,’ economist Peter Morici, of the University of Maryland, said. ‘Home purchases will be viewed as less of a near-term speculative investment, and individuals will be more likely to spend less on new homes.’”

From Bloomberg. “U.S. economic growth cooled to a 1.6 percent pace in the third quarter, the weakest pace in more than three years. Most of that slowdown came from a drop in construction spending and a wider grade gap. ‘We are feeling the effects of the housing bubble bursting and while the ill wind is not pleasant, it is not likely to be long-lasting,” said Joel Naroff, president of Naroff Economic Advisors

“Markets around the world are awash in excess cash, fueling a frenzy of investment from London to Tokyo that may lead central banks to push interest rates higher than investors now anticipate.”

“‘Interest rates in the main economies have still not been raised enough,’ says Tim Congdon, visiting fellow at the London School of Economics and one of the ‘wise men’ who advised the U.K. Treasury in the 1990s. ‘here is a buoyancy in asset prices one gets with high-risk monetary growth.’”

“Tim Drayson, global economist at ABN Amro Holding NV in London, says major central banks will all have to tighten credit more than investors now assume. ‘Money supply on a global basis is growing quite rapidly as is overall credit growth,’ says Drayson, a former U.K. Treasury economist. ‘We don’t see much evidence that monetary policy around the world is restrictive.’”

From MarketWatch. “The U.S. economy is strong enough that further interest-rate increases wouldn’t push it into a sharp downturn, said Jeffrey Lacker, the president of the Federal Reserve Bank of Richmond, on Monday. ‘The economy is resilient enough to withstand further tightening,’ Lacker said.”

“Lacker said he was not far out of the mainstream of Fed officials. ‘I’m unhappy with inflation where it is now and I’ve heard several other members say the same thing. So I think there is a broad consensus,’ Lacker said.”

From Reuters. “Bank of Canada Governor David Dodge rapped the government housing agency last summer for fueling inflation with new mortgage insurance products, according to a letter released by the central bank on Monday.”

“Dodge told CMHC President Karen Kinsley he was dismayed with a June press release announcing the agency was offering mortgage insurance for interest-only loans and for amortizations of up to 35 years. ‘At a time when the housing market is already overheated, further fuelling demand through CMHC actions would only put further upward pressure on prices and thus make housing less, not more, affordable for Canadians,’ Dodge said in the letter.”

“The central bank explicitly said high housing prices were a key risk to its inflation outlook in July, when it updated its monetary policy report.”

“CMHC’s press release also hinted it would look for ways to reduce the cost of accessing financing for house buyers, a development Dodge said would be ‘very unhelpful’ at a time when housing prices are rising faster than all other items in the consumer price index. Dodge’s concerns dissipated after meeting with Kinsley, central bank and CMHC officials said.”

From theStreet.com. “Land writedowns, along with continued aggressive discounting of homes, helped cut Pulte Homes and Centex’s quarterly earnings in half last week. But another looming hit to gross margins has yet to fully materialize in the homebuilding sector.”

“Homebuilders enjoyed record profit margins because they were generally building on cheap land that was priced before the boom. Builders are currently ‘working off all their old cheap land, but eventually they’ve got nothing but the more recent stuff,’ says A.G. Edwards analyst Greg Gieber.”

“‘If you look at land controlled by homebuilders, either owned or optioned, of the group I follow, 35% of those lots were priced in 2005,’ Gieber says. And a year ago, land prices remained high. Now builders are taking charges and walking away from options on that more expensive land, as Pulte and Centex did last week.”

“But much of that newer land is still on the builders’ books. This creates a tough dilemma for the companies. They can either build on their most recently purchased land and possibly lose money as housing prices fall or go flat over coming years. Or the companies can continue to write down their land and walk away from option contracts, as builders like Pulte and Centex continue to do.”

Chicago Business reports from Illinois. “Like the opportunists who quit their jobs to become day traders during the ’90s tech-stock bubble, a herd of amateur builders in this decade has stampeded into the residential construction business, lured by years of booming sales and rising prices. These newbie developers have contributed to a flood of spec buildings that has, in turn, pushed the number of unsold new homes to its highest level in at least 17 years.”

“In the third quarter of this year, the inventory of finished, unsold homes in the Chicago region reached 5,499, a 13% increase from the second quarter.”

“Jeff Moudry broke ground on his first house in February. Mr. Moudry started construction on spec, but was so confident he could sell the house, a brick-and-stone four-bedroom in southwest suburban Shorewood, that he quit his job to work full time on the construction.”

“Eight months later, Mr. Moudry has seen the torrid pace of home sales in the area slow drastically, and watched the inventory of unsold homes pile up, including another spec home for sale right next door for $649,000, his asking price. ‘It is a scary market for people just getting into the business,’ says Mr. Moudry. ‘It makes you nervous thinking winter’s coming and I’m going to sit on it all winter.’”

“Of the 14 active listings for the subdivision, all but one are spec homes, says broker Nicolette Berardi. That’s a problem for Mr. Moudry, who is paying $3,800 a month on the $500,000 loan he took out to buy the lot and build the house.”

“It looks like the end of a great housing boom that began in the mid-1990s, making thousands of homeowners wealthy and fattening profits at related businesses, from mortgage brokers to construction contractors.”

“Jim Venhuizen feels the sting of Chicago’s worsening housing slump about 10 times a day. Mr. Venhuizen, the owner of Cimarron Construction Inc. in New Lenox, takes that many phone calls from unemployed carpenters looking for work. Some are former employees he was forced to lay off in recent weeks as his business slowed along with home sales and construction.”

“‘It’s not enjoyable,’ he says. ‘Some of them are going to have some real problems with mortgages.’”

“In the first nine months of 2006, sales of new Chicago-area homes fell 20% compared to the year-earlier period, according to real estate consultant Tracy Cross Associates Inc. In the third quarter alone, sales were down 32% compared to third-quarter 2005. Residential construction spending in Illinois fell 9% in the first nine months of 2006 from the year before, according to McGraw-Hill.”

“Homeowners are sweating, builders are suffering and brokers are scrambling. Rick Levin is having his best year ever. Mr. Levin is a real estate auctioneer, putting him in that coterie of countercyclical businesses that profit when the economy turns south, a group that also includes debt collectors, bankruptcy lawyers and bond investors.”

“Revenues at the Chicago-based auction house have tripled in the past year, as Chicago’s residential real estate market has slumped. Mr. Levin’s clients range from well-to-do property owners on the North Shore who can’t sell their $2-million mansions to developers trying to cut their land holdings in a weakening new-home market.”

“Some sellers agree to take any price. Others retain the right to reject a price deemed too low. In Mr. Levin’s view, many sellers have yet to learn what ‘too low’ means in the present slowdown. They continue to expect the massive price appreciation of the past decade. At the same time, buyers tend to exaggerate the slowdown’s effects.”

“The disconnect keeps a lot of his auctions from leading to a closing. ‘Sellers think it is 2005 and buyers think it’s 1929,’ Mr. Levin says. ‘You can’t get either side to blink.’”

“Still, he’s not complaining. Mr. Levin estimates he will auction up to 500 Chicago-area properties this year, up from about 150 in 2005. He’s looking to add about five people to his full-time staff of 10 and is eyeing new markets like Southern California, Arizona and Florida.”

“On Nov. 15, Mr. Levin will auction five new homes in West Rogers Park. Originally priced at $899,000, the homes have been sitting on the market for about a year. The developer ‘elected to sell them sooner rather than later and reduce their carrying costs,’ says the firm’s lawyer, John DeAngelis.”

“Mr. Levin must be brutally honest with clients, especially homeowners who come to him as a last resort. ‘Sometimes dashing their dreams about what their largest asset might be worth is a real sobering experience,’ he says. ‘I’m afraid that I’ve got a lot more of that in the next 12 to 18 months.’”

The Palm Beach Post reports from Florida. “Naples saw existing-home values fall 8 percent in September on 37 percent fewer sales, according to last week’s Florida Association of Realtors report. The really confidence-shaking price drops in Naples occurred this month at JJManning Auctioneers’ sale of 44 homes in the wealthy Southwest Florida enclave.”

“Real estate analyst Tom Lawler looked up the first 15 properties’ Zillow.com values and their sales histories. For those homes with ‘not too silly’ Zillow values and that had sold within the past few years, Lawler came up with some startling discoveries about the Naples market, where the median price of an existing home in September was $446,900, according to the association, down from $497,500 a year ago.”

“Only one auction property sold for more than its last sale. On average, Lawler says, auction prices were down 28 percent from the last sales price. The home at 920 Forest Ave., which sold for $690,000 on July 22, 2005, sold at auction for $400,000. The home at 1848 Crayton Road, which sold for $950,000 on March 10, 2005, sold at auction for $625,000.”

“A random check of all the homes auctioned suggests similar results for the rest of the properties, Lawler says. One reason there’s currently more than a two-year supply of homes for sale in Naples, he says, is that sellers are asking ‘unrealistic prices.’”

“‘For those who have to sell, these results should be sending chills down their spines,’ he concludes.”

“Auctioneer Perry Diamond stood on the pool deck of the historic home in West Palm Beach’s Flamingo Park and barked into his microphone. ‘Looking for $600,000, do I have $550,000? $550,000? $500,000?’ said Diamond. ‘Let’s kick it in at $500,000.’”

“‘The auction is today,’ Diamond said. ‘You’re going to buy it today, or it’s going to go back to the seller.’ Still nothing. Nevertheless, after 70 seconds of patter, Diamond declared that he had a $500,000 bid for a home that had been listed for as much as $725,000. ‘We can consider it sold subject to seller’s confirmation,’ Diamond said.”

“But there was no bid for seller John Neuharth to confirm. Neuharth waited out the auction at a friend’s house, and two days later he said he was still ‘totally confused’ about what happened at the auction.”

“Amid a slow market for home sales and a growing glut of properties, frustrated sellers increasingly are turning to auctions in search of quick transactions. Auctioneers hype the process as a way to build buzz and move homes in a moribund market. But as the failed auction on Oct. 14 showed, this marketing method is no magic pill.”

“Longtime auctioneer Karlin Daniel of Stuart derides reserve sales such as Neuharth’s as ‘hocus-pocus auctions’ that give the business a bad name. ‘The worst part is, people go to the auction and say, ‘No one bid. Auctions don’t work,’ Daniel said. ‘I’ve heard that for 30 years. That’s really damaging to auctions.’”

“Diamond, on the other hand, said he will ‘never, ever’ consider an absolute auction because of the danger that a $500,000 house would sell for $50,000.”

“Palm Beach County and the Treasure Coast are no longer the booming sellers’ markets they were between 2000 and 2005. The slowdown has caused an astounding 49-month supply of existing homes for sale in Palm Beach County.”

“Last month, Palm Beach County and the Treasure Coast led the state in declining home sales and tied for the third-largest rate of falling home prices. That has led to thousands of frustrated sellers such as Neuharth looking at everything from auctions to value-range pricing to unload their home.”

“Shortly after he declared the property sold, Diamond acknowledged that there was no sale. ‘Sometimes you want to cry,’ Diamond said while standing in Neuharth’s dining room. ‘Let me introduce you to one of those times.’”

“It’s not uncommon for an auctioneer in a reserve auction to make a bid on behalf of the seller, Daniel said, and Diamond said he declared the home sold simply to save face for the seller. ‘All I was trying to do was to protect the price of the home,’ Diamond said.”

“But the disillusioned seller was upset that his auctioneer went ahead with an auction when only one bidder showed up with the requisite check for $25,000. ‘I am not pleased,’ Neuharth said. ‘There shouldn’t have been an auction because there was only one registered bidder.’”

“Diamond’s auction partner planned to sell another house a block away from Neuharth’s on the same day, but that sale fell flat, too. Sally Markman expected to auction that property, but she said an offer came in just before the auction. Markman canceled the auction, saying she didn’t have enough bidders.”

“Markman’s client, Broward County real estate investor Dennis Bittner, said he rejected the offer for 915 Flamingo Drive because it was well below his $239,900 asking price. Markman even advertised the home as a ‘pre-foreclosure’ sale, although Bittner said he’s in no danger of default.”

“Sellers who want to strike a middle ground can try a ‘minimum-bid auction,’ which auctioneer Marilou MacKenzie recommends to sellers such as Robert Bono, who plans to auction his home next month. The minimum bid is $269,900, a little more than half the home’s list price of $515,000.”

“‘It’s a little frightening,’ Bono said. Still, he hopes the auction brings a quick sale and gets him out from under his mortgage on the house, an investment property that’s producing no income. ‘Listing it is going to make it one of thousands,’ Bono said. ‘And I don’t have a tenant in there, so it’s costing me $3,000 a month.’”

The News Press. “Commercial real estate broker Frank D’Alessandro sent a shock wave throughout the residential real estate community by predicting, in his weekly News-Press column, that the residential market would not recover until the third quarter of 2008.”

“Yet in a July 2005 column, in which I predicted that the housing bubble was about to burst, D’Alessandro disagreed with my assessment and was quoted as stating, ‘While housing prices would be leveling off, the 5 percent annual population growth would be the key factor in maintaining current housing prices.’”

“D’Alessandro, who heads the largest commercial real estate brokerage in Lee County, admits that he was caught off base last year. ‘With homes being grabbed up as soon as they came on the market, I assumed that future snowbirds, buying a second home, were major contributors to the boom. Instead it was speculators and, once the market showed signs of softening, they started to bail out, further depressing the market.’”

“This time D’Alessandro has more hard evidence to back up his prediction, pointing out that Realtor multiple listings have a huge overload of 12,654 single-family homes and 7,819 condominiums on the market at median sale prices far in excess of the current median sales price of $264,100 for homes and $237,500 for condominiums.”

“This residential inventory does not include thousands of houses and condominiums for sale from a score of builders.”

“(Realtor) Barbara Watt says that signs of renewed activity are already taking place, especially in Cape Coral, where prices are already down by almost 20 percent. However, sales figures throughout Lee County do not bear out Watt’s optimism. While there are buyers waiting on the sidelines, they are waiting for prices to drop even further.”

“Buyers are now leery about reducing monthly payments by taking out no-interest or adjustable rate mortgages that, during the boom period, accounted for nearly 30 percent of the mortgage business. Many families who purchased homes last year at peak prices, with little money down and without fixed-rate mortgages are now facing foreclosures.”

“When will the market pick up? When prices begin to drop even more. And there is movement in that direction already from new-home builders who, feeling the pressure from heavy investments in land and infrastructure, still need revenues even if their profit margins have to be cut. Despite the glut on the market, they continue to build.”

“Sunday’s real estate section shows most builders either cutting prices on existing models, covering closing costs or offering free upgrades. However, most existing home sellers are reluctant to reduce their asking price significantly even though they should realize that few people are ever fortunate enough to sell at the peak of the market whether it is a house or a publicly listed stock.”

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