Brad DeLong wrote:
> Bob Shiller says that in America nobody can ever face selling a house for
less than 80% of the maximum they thought it was worth, so whenever housing
prices in an area drop 20% below their previous peak, they stop dropping, and
instead volume of transactions drops to near zero...
Is what people think a house is worth generally the same as the market valuation at a recent peak? I mean, is this statistic based on the assumption that people accept any peak valuation, no matter how ludicrous? If so, then we can expect the floor of the housing market to be a lot higher, and hence even less of a threat to accelerating debt-deflation.
Christian