[ReyDM]

The problem is that in three years when Joe and Suzy home-buyer's "teaser rate" expires and the rate goes up to 6.8% (or higher), they will likely have to sell or re-fi again. Not sure how they will pull off the latter if rates are still 6-7%, unless there is a bank stupid enough to write them another loan at sub-prime rates on a now higher total amount (assuming that they are negative am land.)

Now imagine what happens when many people are in this situation ... desparately trying to sell to get out from under debt. Supply and demand my friend, prices will have to drop as excess inventory comes flooding onto the market.

[antceecee]

I had to look at where you live - Georgia... I guess you could have excess inventory there. Here in the OC, I doubt that will occur. Prices may make a correction (some have gotten rather ridiculous), but I don't think things will crash as some here are hope-a-hope-a-hoping!