Capitol Hill Blue Forums Political Issues Finance, the economy & Economics How will the financial crisis develop?

If one were to price real estate in any given market before subprime loans were widely available (approximately 2003) one would have a pretty good idea of the value of a property attached by a mortgage. These houses are indeed worth something but they won’t begin selling in sufficient numbers until buyers feel confident a bottom has been reached (IMO 2003 levels) and, as Ardy says, money is available.

Most of California real estate values already have dropped to 2003 levels, which is double 1998 levels. If someone has not purchased a house there in the last few years they are probably not underwater and have accumulated quite a bit of equity. But if lenders are unwilling to lend, or funds simply are not available, we indeed have a problem.