Mmmmmm. One of the sexiest things about being an economist is the words you get to use. Macrodata. Mmmmm.
If my little dumplings will notice, no less than The New York Times is calling for a real estate slowdown. Click on the link for the title of this post to see the article.
For those of you who remember, Econo-Girl predicted that the real estate bubble will pop in September and the eggheads will notice in October. That's because they only look at macrodata. Poor little economists. To know the real deal, shoe leather is required. The linked article does a good job of summing that up.
The article also downplays a doom scenario after the bubble pops. It mentions that housing will stay on the market longer, making for less competition and no upward pressure on house prices. True enough. However, the article does not mention the effects of a CONTINUED oversupply of housing. People will start listing their houses at prices below market to get them to sell. It won't happen right away. And like the article mentions, yes, sneaky realtors will pull a property off of the market rather than have buyers know how long it sat unsold.
All these tricks will only delay the inevitable crash. And then what? People will not be inclined to spend more than they earn anymore. We might even save, and will certainly pay down debts. So a recession looms, I'm afraid. And other countries, most notably China, will be propelled into recession also.
Prepare for silly fools unloading their houses and discounted prices in about a year or so. The exact timing is dependent on interest rates.
And hats off to the Lazy Iguana, who reminded me to stay the course when I began to waver.