Slow-down, crash or soft landing?

The most-commented stories on SacBee.com always seem to be about the Sacramento housing market. Yesterday’s piece is no exception. with people arguing in the comments section that the market is a) vastly overpirced, with up to a 50 percent price reduction on the horizon; b) in stagnation, with no price increases in the future, but no “crash”; or c) just taking a breather.

Well, actually, most people stopped making the “breather” case a few months ago, and with inventories high and prices soft the best we can hope for now, it seems, is a small, short-term (but probably well-deserved) market correction. I mean, c’mon: People have been asking for a years who on earth can afford an “entry-level” home here. Fact is: There aren’t many of those people left. And those who leveraged everything they had and used “creative financing” to get into their starter homes are going to have a hard time holding on to them if interest rates rise much.

I don’t have to look far to see the new reality. Next door to me is a house that has been empty since last summer, since the family who owns it moved away. It’s a darling little house, appraised a few months ago for quite a bit more than its current asking price, which has fallen at least twice. Offers have been accepted and deals fallen apart. I’m sure the owners are freakin’ big-time by now. How low can they go? How long can they hold on?

Market corrections are normal, of course. I have friends who couldn’t give their homes away in Seattle or Denver when those markets were staggering. And my first house appreciated 50 percent in two years in the late ’80s, then fell back to its purchase price value before slowing doubling in price before I sold it.

I’m not a speculator, to be sure. (At least not in terms of money. Speculating as in ruminating endlessly and sometimes pointlessly is my main job as a perfessional writer.) For me, it’s all an academic exercise in paper profits (or non-profits) since I’m not planning to go anywhere anytime soon. I buy a house to live in it, and I believe home-owners are good for neighborhoods. There’s nothing like the feeling that you own your piece of America, and can paint any color you want and put nails in the walls with inpugnity. I always feel sorry for people whose timing is bad when it comes time to move, but for the speculators — those who drive up the prices and abandon the market when it cools — no pity. They are the ones who have kept my friend’s daughter and her husband in a rental condo, yearning for a chance to move their young family into a home of their own.

Maybe in the months to come they’ll finally be able to swing it.