> The houses sit empty because the owner would rather maintain a (fictious at this point) valuation than realise the loss.
This happens for a while, and volume collapses except distressed sales. Then there’s a gradual recalibration where sellers adjust to a new normal and properties come back on the market.
Take a look at post-2008 crash behavior and you’ll see this dynamic: volume collapses, then a gradual normalization of volume, all while still far below the previous peak.
One example scenario: if you own a home but want to upgrade, the new home you want got a lot cheaper too. So you might take a loss on your current place to get into the new one.
That doesn't seem quite right. If you're moving up, your decision to buy will primarily be based on affordability, even if the old house had a better interest rate. And in a high-interest environment, house prices become lower and partially offset the extra interest expense, so affordability hasn't changed all that much.
Prop 13 has a big effect but more so in downsizing (eg empty nest / retirement) than in upsizing.
This happens for a while, and volume collapses except distressed sales. Then there’s a gradual recalibration where sellers adjust to a new normal and properties come back on the market.
Take a look at post-2008 crash behavior and you’ll see this dynamic: volume collapses, then a gradual normalization of volume, all while still far below the previous peak.
One example scenario: if you own a home but want to upgrade, the new home you want got a lot cheaper too. So you might take a loss on your current place to get into the new one.