
A fresh outbreak of mortgage delinquencies won't cause a crash in housing. As long as supply continues to be restricted and the percentage of all-cash purchases is high, prices simply won’t go down. Sales volumes may continue to decline, but prices will remain suspended where more buyers can’t afford them unless something changes at the banks and they begin approving more short sales or foreclosing on their delinquent borrowers rather than modifying their loans. In the post Is San Francisco, the most overvalued US housing market, going to crash?, I challenged housing bears to construct a realistic scenario where house prices crashed. The good people at Patrick.net had a lengthy discussion on the topic, and many scenarios were considered; however,…[READ MORE]