The price is set by the ability of other buyers. Doesn’t matter what one individual can pay if the climate points to falling prices, why would they overpay when they think prices will fall? Prices are set by willingness to lend and interest rates, not by cash buyers.

I was just responding to the poster who wrote, 25 percent cash buyers isn't enough to prop up the market.

I don't know if it's enough or not, I was making the point that that 25 percent number is in aggregate for the entire large country and there are some insane skews in local markets where the number is much higher.

But to directly answer you, if inventory is dried up, no one is listing, and the stuff that comes online is still priced like mortgage rates are 3 percent, that might kill off a large pool of buyer demand but those cash buyers are still the marginal buyers and bidding wars will ensue just the same. I'm seeing this at present.

I think what will happen though is that those cash buyers, who are not stupid, will read the direction of the rest of the market and realise the music has stopped. At which point they won’t want to buy either.

Crashes often happen in slow motion, as this one is. It’ll take years to play out.

I hope so. There's a unique situation playing out that the inventory is extremely low in parts of the country where there hasn't been a lot of building (so I exclude places like Phoenix, Boise and Austin where there is a crash). So even if the non-stupid cash buyers pull back, and the financing buyers are priced out, it leaves a slim supply and a slim demand. But the supply didn't suddenly explode, who will sell their sub-3% mortgaged homes, even to downgrade or upgrade to a new home, unless they absolutely have no choice. That leaves family events like deaths, marriages, and such.

That's why - unfortunately - there could be no crash this time. Just a long period of stagnation and low turnover.

Well redundancy is the other event which forces a sale. In a recession that is what happens and it becomes a spiral. It is quite possible to see a long period of stagnation though with no nominal price drops, just real price drops, as may well happen with stock prices too (see Japan in the 90s to today). The rest of the world is ahead in entering a downturn, but a recession and mass layoffs is coming in the US too, particularly in the tech sector which is massively overvalued and overpaying for talent right now.

I think what we can say is that the boom is over, and this will impact stocks, real estate and jobs for at least a couple of years till assets become more affordable again.

What can change this is a fed pivot on interest rates, which will happen at some point when things really break (bond market, stock market) or inflation comes down a bit, but not until then, so unlike previous downturns the fed doesn't have much ammunition here as they need to look serious on inflation.