Who wants to buy in a falling market?

This one is from Saturday morning. Decided to post it here for those who don't visit the other housing bubble blogs. The story comes from the Washington, D.C. area, but you could easily replace Arlington with any Northern NJ town (Hoboken, J.C., etc) and it would be just as accurate. So for all those obsessing about real estate that doesn't seem to make any sense, you are not alone.

From the Washington Post:

He's Obsessed With Condo Prices -- But Can He Ever Buy One?

James Cave, 34, navigates smoothly through the congested streets of Arlington on a recent workday afternoon. He's wearing a baseball cap and driving a new black SUV. He's the very picture of urban cool, but he is simmering hot with rage. Shaking his head and waving his arms in frustration, he points out what he sees as the rising signs of insanity all around him.

He gestures to one newly built condominium tower where he had considered buying. "$350,000 to $1 million," he snorts. "Next to a gas station and a fast-food restaurant. Smell it! Smell it! You can smell the fast food cooking!"

Cave points to another rising edifice. "You can see the signs -- luxury condos for $800,000. What could be so luxurious in a condo?"

He nods toward another pricey building, mockingly noting that it overlooks a bus parking lot. "That's no view," he says.

The real estate market has become an obsession for a lot of people in this region, and Cave is one of them.

Instead, he spends at least part of every day thinking about real estate -- what's for sale, how much it costs, where it is located, what it looks like. He wonders how people can afford it, whether home prices can continue to rise and what would happen if they were to fall. He worries most about what would happen to him if values were to fall after he finally bought, possibly draining years of his savings.
...
"It seems like the moorings are coming undone from reality," he said. "It's like the Internet stock craze -- you'd sit there and say something doesn't compute here. . . . What's happened in the last three years? My salary hasn't gone up anything like that."

He reflects on the old rule of thumb that people shouldn't pay more than one-third of their income for housing. When did that change? Some of his friends, he said, say they are paying 60 percent of their income for housing, doing it with interest-only loans, facing the prospect of balloon payments that will come due.
...
"In some markets, we've seen prices go down, and nobody wants to buy in a falling market," he said.

Caveat Emptor!
Grim