Actually, I should say it this way: the biggest threat to the health of the real estate market is the behavior of the average US homebuyer / homeowner.

DEAR BOB: We are in the process of buying a larger home and aren't sure what to do with the home we now own. We can't afford both. If we sell our current home, we will lose about $50,000 based on similar nearby home sales, compared to what we owe. If we rent it for about $2,000 per month, that isn't enough to pay the $3,300 monthly mortgage payment. We have about $15,000 in savings, but that won't last long with a loss each month. I've been told about a "short sale," which is a step above foreclosure. But I'm not sure what that would do to our credit. Would a rent-to-own work so we could increase the monthly rent? What should we do? &8211;Hillary A.

HUH????

Okay, in what situation would you be facing a $50,000 loss on your property - not on what it's worth vs. what you paid, but based on what you owe??? Probably, the only time this would happen is if you bought sometime over the past two years, and only if you got a 100% mortgage loan.

So, why is this family moving so quickly? It can't be because of some unforeseen tragedy - the family is moving to a larger home!

The family has little in savings ($15,000?) even though they own a home that might have cost as much as $500,000 (or more), which raises more red flags.

You know, my mother used to tell me there were families in our town (Topsfield) that had wonderful, beautiful, expensive homes, but when you went inside, there was no furniture - the families had spent all their money on their mortgages, and had nothing left over to pay for furnishings.

I guess she was right!

The more things change, the more they remain... insane.

Source: Lowball offer wise in buyer's market (third item) - By Robert J. Bruss, Inman News, by way of The Boston Globe