I wrote in unambiguous English.

The inventory is indeed being reduced, which is having a positive effect, as you’ve pointed out, on existing houses.

Today a Phoenix agent reported his tour of a few home builders’ sites over the weekend. They were busy as a county fair.

Builder inventory, short sales/foreclosures, and panic sellers will pretty much be out of steam by the end of this year — according to my amazingly unreliable & cracked crystal ball.

That’s when, as you seem to say, the regular housing market will begin to heal in earnest.

The media will continue selling death and destruction until they’re overcome with empirical evidence to the contrary. They give up only when they begin to appear foolish in their own eyes. Of course by then they’ve played the fool for quite awhile.

There are always deals. We are just “arguing” over a theoretical best time for deals. Angels dancing and all that. Most would grow old and gray without pulling the trigger waiting for that best time. I agree with you that if the deal works at the beginning it will ultimately prove beneficial to the client be it 2008 or 2009. Just because I see the best deals sometime after Q3 ’08 in no way is a condemnation of any deals that might make sense this spring. Heck, you have to look at all kinds of things like foregoing depreciation and rental income and taking months or a year off the note and the possibility that rates may be higher when prices are lower. If rates plummet this spring count me in as an early buyer and damn trying to get the best price at the expense of higher carrying costs.

It’s never difficult for me to turn an investor down due to insufficient (or zip, zero, nada) cash reserves. (Sominex Account) I don’t mind being the bus driver, but knowingly heading the wrong way on the freeway ain’t my cup of tea.

I think Brian would agree, as do I about investors treating homes in certain areas like buying stocks on margin.

Problem was, nobody explained margin calls.

It’s my belief, and I’m acting on it, that buying this year will make a positive difference in investors’ lives over the long haul.

I don’t think I’m suffering from survivors’ bias; I’m hoping for a case of the “realities”. I’m more firmly in this camp:
http://exurbannation.blogspot.com/2008/01/valley-prices-return-to-may-2005-levels.html

I want it to happen so we can get back to the business of rational optimism rather than castle-in-the-air exuberance.

Truer words were never spoken. Disagree with my poor elocution or choice of illustrative example but you definitely get my central thesis. I applaud the noticeable quality improvements of all the participants. And while you didn’t mention it the remaining potential retail investors (we remaining customers) have got to make you more comfortable with their ability to participate successfully as well. It has to have been hard to tell people ‘no’ to a deal because they didn’t grasp liquid reserves or verifiable income minimums.

We can still respectfully disagree about the bad actors and their impacts. I’m looking at the early default rates for loans in 2006-07 and the known investor proportion in places like Phoenix and Las Vegas and conclude that these were not commitments to homes but rather naked bets on margin. I am not talking about 125x rents in a demand market, I am talking about highly leveraged purchases with no real rental investment prospects. Don’t get me wrong about my outlook, these could very quickly turn into opportunity. I’m not predicting general chaos and to be honest you have to admit I’m being pushed into playing a bit of the devil’s advocate here.

However, the Bakersfield market in general wasn’t affected either way enough to matter.

Your point about it being easier for us is golden. I’m seeing this everywhere Brown and Brown go. The general quality of agents in any given office are noticeably improved — and that does indeed help you and I.

I agree it isn’t obvious on the surface. Humor me then beat me up if you think I am still off base.

What kinds of agents are leaving? This isn’t a trick question nor a hard question. Let’s pick an extreme example agent and see what happens. I pick that paragon of virtue David Crisp. I’m not cheating, I said extreme example, and let’s not paint with a broad brush. I’m just saying now that Crisp is gone we know that several hundreds of properties in Bakersfield were incorrectly priced. These are the agents that are leaving. It isn’t just his own dirty deals but we are discovering daily that his network was distorting the entire regional market. Even if you want to for whatever reason gloss over any potential price distortions there’s no denying that as all these deals unravel their REO inventory status is dragging prices down.

I’m not making the general case but the challenge was to provide an example. I’d never stoop to comparing people to David Crisp but I doubt anyone can deny his actions have resulted in the distortions I describe.

We honest retail players are no longer going to have to compete with these phonies. That means we get better prices doesn’t it? You honest agents and mortgage brokers don’t have to shave ethics or necessary margins to make the deal either.

It is way too early too declare a winner but I ask you to keep an open mind that my points might have merit pending confirmation.

A shrinking agent pool hasn’t been shown to have a direct affect on ultimate sales prices, at least that I’ve ever heard. Your rationale makes sense on the surface. That said, there’s an unspoken assumption that buyers will change their behaviors significantly enough to alter market prices as a direct or indirect consequence of the agent population. Not sure I can see that.