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Housing Bubble - Part Deux
Submitted by Jim Quinn via The Burning Platform blog,
The housing recovery without mortgage originations is coming to its inevitable conclusion. The Fed, Wall Street bankers and the US Treasury have been able to increase national home prices by 30%, with 50% to 100% in some bubble markets, using 0% interest rates, a massive buy and rent scheme, withholding foreclosures from the market, encouraging foreign cash buying, and allowing flippers back into the market. In a real free market would home prices go up by 30% while mortgage originations remained flat for the last four years?
Thirty year mortgage rates have been falling for the last 30 years. They bottomed at 3.35% in late 2012. Since then they rose as high as 4.4% in early 2014. They fell to 3.6% by early 2015 and are now hovering in the 3.8% range. Everyone who had a high interest mortgage loan, including those with underwater mortgages, have refinanced to a lower rate. The economic boost to the economy from the lower mortgage payments is over. The Obamacare costs have spent the mortgage payment savings. The combination of declining real household income, overpriced homes, millennials with massive levels of student loan debt, and now rising mortgage rates are putting a halt to this fake Fed recovery scheme.
The Fed believes they must increase rates by .25% in December to regain a semblance of credibility. Mortgage rates will immediately rise. The government is now desperately trying to keep the balls in the air by allowing low income buyers to purchase homes with only 3% down. Freddie, Fannie and the FHA are guaranteeing these loans with your tax dollars. All three agencies are already insolvent, so what’s another few hundred billion of losses hoisted on the backs of taxpayers? Anything to keep the farce of an economic recovery story line alive for a little while longer.
At this point there is no scenario that turns out positive for the housing market. If the Fed has the guts to raise rates, the housing market will tank because mortgage rates will rise. If the Fed chickens out again, it will be because the economy is clearly in recession and demand for overpriced homes will plummet as unemployment rises. Home prices have risen so far above fair value at this point, the market is already beginning to topple.
Flippers are getting stuck with houses they can’t flip for a profit. Hedge funds have stopped buying and have begun selling. Anyone dumb enough to have been lured into this market in the last few years will be underwater in no time. The foreclosure train will be leaving the station shortly. We’ve been here before. It was ten years ago. Some people never learn. I wonder what the oligarchs will pull out of their hats after housing bubble part deux pops.
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It's important for the banksters and the Fed to own all the houses along with all the stocks.
I agreed before I disagreed. A few areas, such as the Florida panhandle, along the beaches, is a very safe area, great schools, and fueled by the 1%-ers. Any resort-type area fueled by the 1%-ers will remain very strong. We have 287 new housing permits, 99% of them over 1 million, practically no mortgages at all.
Here in California the Chinese are swooping in and buying everything with cash. When will that end?
Once Americans are enslaved by the Chinese. They have cash selling junk to Americans and Americans gladly bought it with so called so cute and how beautiful it is.
Using history to find similarities and differences helps to make good analyzes. I remember when everyone thought that Japan would be our masters back in the 80's. They bought the Ponderosa and historically significant offices in New York. Japan is an old bitch that used to make our stuff. China is our new bitch making our stuff. China has internal problems that will put them in a position to start a war. They are going to need to keep the young men focused on the American "threat." America just wants cheap stuff. Once we're done consuming them, we'll move on to the next deperate country. Europe did this, think colonies and what they imported - exported, and look where they are today. America is heading there. We will get there faster, fatter, and with more violent disruptions than Europe. The cycle can also be seen in Greece, Rome, etc.
"If the Fed chickens out again, it will be because the economy is clearly in recession and demand for overpriced homes will plummet as unemployment rises."
Nope. If the Fed once again does not raise rates - which it will not for the plethora of reasons covered in ZH before - the Fed induced housing "boom" will continue and values will continue to rocket north just like the stock markets. Equities are the key - the utterly artificial distortion of pricing in the US and world markets (except China where evryting is awsum!) has home buyers believing the recovery/prosperty lie. Stock markets are the new ATM. Until they inevitably crash, the house party continues.
Housing Bubble 2.0 is bursting already. The FED is irrelevant at this point. There is simply not enough hot money nor over leveraged home debtors to support anymore increases this cycle. Manhattan and San Francisco luxury condos may stay elevated, but the vast swaths of suburbia were flipping and REO/Rental Ventures have given us the completely unjustified 30% run up of the last 3 years are already correcting. Even foreign capital in need of a laundromat doesn't want to take unnecessary losses. Now that price action is starting downward in the further suburb areas, those properties are no longer flip/specuvestor options. As those homes close at lower prices so will they influence homes closed to the metro. No 2 periods are complete analogous, but 2015 felt a lot like 2007 to me. The market psychology is being held together with scotch tape. An Uber Dove FED can't save a housing market which is about to have a butt load of Mortgage Modified homes coming up for refinance. Those homes saw no principal reductions and many will go right into the foreclosure process. This Housing Correction might be a little more drawn out than the last (think of the 1991-1995 California correction) but all signs say it has begun already. The median price in most major metropolitan has been worthless for at least a year as luxury purchases in a low volume environment are completely skewing the number.
That's a good theory, but I don't see any other (large) country with a cheap yet decent workforce for the US (and China) to exploit. China was the last one. Where are we going to go for that cheap labor? Africa? Yeah, they can't even run the water wells that they're given.
I don't have the answer, but I'm looking for the signs that will tell us what's next. Unfortunately the easy guess is that we (USA neocons, neoliberals, jews, etc.) start WW3 just to reset the debt bomb and get rid of a few hundred million excess mouth breathers. Let's all hope that doesn't go nuclear and wipe out 7 billion or so.
Yes, I agree. There is no single country that can be exploited. That is the problem going forward. China's living standard has increased and with that comes social problems. Using smaller countries like Viet Nam or other southeast asian countries is extending the trend. The trend is nearing its end. Consumption is increasing in China which will reduce the availability of good (caused by increased prices) to the US.
WWIII is coming. This is but one of many many causes.
they have already turned onto their own sheeple
I spent 2 months in Japan recently - they live very well ad are much happer and better socially connected than Americans. My American friends there don't want to leave.
they haven'tlost their soul and sold their country as we did. And they are proud of their work (and not irrationally competitive like Americans)
They have a good word for the pride of producing, creative process etc:
monozukuri is about having a state of mind, the spirit to produce not only excellent products but also have the the ability to constantly improve the production system and its processes.
Japan is an aging country where the men and women aren't interested in sex with each other. The country (and culture) is doomed.
Yup
Loook at Hawaii real estate in the 1980s. Fueled by hot Japanese money. How did that work out?
It ends for the chinese when the housing bubble pops like it did for the japanese in honolulu in 1992
Now Hedgefunds are coming into Las vegas and looking to buy portfolios from 50-100 rental homes at a time that are income producing properties.... the days of cheap rent is OVER!
www.ViewLasVegasRealEstate.com
Hedge Funds and Private Equity have been in a number of markets.That is how real estate sales volume stays up when mortgage apps decline.
That combined with the banks holding inventory on the sidelines represent "the housing recovery"
http://www.bloomberg.com/news/videos/b/ed9077c4-1c48-4b5d-9c8a-bd9e052bd137
http://pemco-limited.com/homes-in-the-shadow-of-a-new-housing-economy
http://www.mortgageorb.com/issues/SVM1311/FEAT_02_REO-Marketing-And-The-...
Once the Chinese own everything we will jack up the real estate taxes, crash the market and buy it back from them on the cheap.
Enjoy what it does to your local economy.
You know the end is nigh, when there are radio commercials (don't watch tv) pimping some schmuck's "foolproof method of flipping houses, with zero cash" scams...
The housing market is being kept afloat by ZIRP money in the hands of speculators and foreigners who use newly bought homes and condos as a money laundromat. The USA is an economic basket case, where, among other things, the death rate of lower income white males has skyrocketed in the past 15 years as factory jobs were off-shored and the Bush family shipped in tons of dope and amphetamines through military airports to tempt those unemployed white guys.
Look at the facts: 62% of Americans now have less than a $1,000 in their savings account (including the 21% who have no savings account). 14% have $10,000 or more in a savings account, according to a survey GOBankingRates conducted this year. We are talking in terms of inflated 2015 dollars, where a root canal costs $1,000 (according to Mike Huckerbee two days ago at the pre-debate) and the NY Daily News costs a $1.25 weekdays for a thin newspaper written by a decimated reporter staff.
The USA is on the road to economic hell minus good intentions. America never really recovered from the 9/11 attacks.
Yup. Was waiting for my plane last night at ORD and overhard one flight attendant tell another that she's bidding for a property and putting 6% down. She was upset not because she didn't have a lender but because she was outbid.
.
A bit of an oversimplification. Areas where prices have gone up the most will get hit the hardest. I know my house in the midwest isn't worth considerably more than it was 5 years ago. You want to talk about something overpriced, look at rentals.
or markets that are overweight with bankers & federal govt jobs -
I believe the long time income to house price ratio in the USA is 2.6
In the UK its 3.5
Either house prices come down 50% or wages increase 50% or some kind of combo
Pick your poison
There is a third possibility. In many other parts of the world housing and food eat up most of the income.
That is the future.
If the Fed has the guts to raise rates, the housing market will tank because mortgage rates will rise...
not necessarily. i wish zhers would stop automatically coming to that conclusion.
agree. last time Fed had an announced tightening agenda, LT rates came down, almost inversion. 2:10s and 5:30s became significantly flatter
yep. and if the big banks currently have an overhang of T notes to sell (which they bought from china and elsewhere) the fed might temporarily raise the ffr to drive people to buy them and thus stop T prices from falling. they will never stop meddling to favor their dealers and overlords.
That is Jim Quinn saying that buzzsaw, not ZH.
thanks for the correction. i realized that after i wrote the comment but i see that same specious relationship espoused in the comments here all the time.
While you are right that a rise in rates does not necessitate an immediate fall in RE... it is, none the less, in the cards at the point the foreign investment dries up. Of course, I tend to favor the long view over the short, and my timing is always wrong... but not my conclusion. This is a classic RE bubble (again), that is so obvious to anyone that dares to view it objectively , that it is almost commendable how well the FED plays the gullible.
Mortgage rates depend on the 10yr.
Agree,there is a large supply & demand aspect to mortgage money. Rates are still very, very low right now.
Some please calculate the ratio of the average house payment to the average family Obamacare premium.
I'm still impressed with what Russia did to save the ruble sometime back. 17% they set their rate at for a short time, to get it under control, and it worked. I can't imagine what the US would look like after a month if the Fed set its rate to 17%. Holy cow would be an understatement.
They did it because they wanted to crush the speculators who attacked the Ruble. It too had separated from reality.
As we should crush the speculators in the US markets (mainly banks). But that won't happen, they're all in kahoots.
Back in the 1980s the UK interest rate briefly went to 15% as they tried (and failed) to do "whatever it takes" to save the Pound Sterling. I had a variable rate mortgage at the time, boy did I learn some new eating habits (grass clippings yummy).
They should have searched out Soros and put a bullet in his head. The Pound would have been saved, but they were too busy molesting little boys.
Realtor, overheard whilst meeting with skittish prospect yesterday at your local Starbucks:
"Look, those idiots in gubmints and the Fed have been printing money, monetizing the debt, debasing the currency, so inflation is about to take off. Rents will skyrocket, if you rent, you're screwed. Home prices/values will take off too. The way to beat this gubmint fraud, which by-the-way is occurring around the globe, is to own hard assets. If you own a home and a fixed rate mortgage, you're in fat city. That wet basement? - in five years, the rent on that will be so high it'll cover your entire PITI - you'll be living there for free! Its a no brainer. The time to buy is NOW. Let's close this purchase before the price goes up..."
Someone, please, tell me why the Realtor is wrong.
The realtor is wrong for 3 reasons
1. You may have a cheap fixed rate mortgage but if the mortgage is $500k and the house has dropped in value to $250k, what have you gained.
2. The rent may be high but will there be any tenants willing or able to pay it? Even if they are initially able to pay, if the tenant loses his job and is no longer able to pay, you have the hassle and expense of evicting him. Then what?
3. You never really own the property. You are gambling that local government, desperate for tax revenue, will not raise your property taxes to some ridiculous level, so any sky high rent you might be able to collect will go directly to pay the taxes.
Thanks for your input, singel. #3 is a good point, the T in PITI would like skyrocket in this inflationary scenario. So might the last I in PITI - homeowner insurance. Your #1 is a refutation of this inflationary scenario of the Realtor. If there is stiff inflation, presumably assets such as homes would inflate in price along with the price of that Starbucks coffee (presently enjoying my 70 cent senior coffee at McDs) and most everything else. As to #2, yeah, being a landlord has hassles, and the rental income is taxable, but if stiff inflation develops and rents soar, offering a slightly below market rent can produce a happy, paying tenant.
Me, in the collapse or expand debate, I'm starting to lean toward the Realtor's perspective. Guess I'm a suckah!
What makes you think RE prices will continue to rise in an inflationary environment? you apparently answered your own question. You are a suckah
I'm only a would-be-suckah. Not planning on buying, as I prefer to travel light in life and stay flexible.
Your RE agent also forgot when .gov is in debt they rob taxpayers by force to pay for their unaccountability.
See taxes going up on RE...see Greece. 2.5 million homes shut off power because of non payment of taxes.
so your wet basement wont be warm enough wiwthout a fire...and fires in the basement?
You get the point.
Yeah, the Realtor would quickly point out that bigger property tax bill produces bigger property tax 1040 deduction, as if it were better to pay more taxes to get the bigger tax deduction.
I agree that in the inflationary scenario property taxes too would inflate, robbing taxpayers. But the biggest losers IMO would be savers/retirees.
The bigger 1040 reduction is only providing you a discount on what you pay to the local government. Best case scenario about 1/3 discount.
So you property tax goes up by $3,000 per year and you get a $1,000 credit from the feds.
You are still getting $2,000 screw job
I would argue to him that wages won't rise in a manner that makes his reasoning able to play out.
He lied. In his "profession" (as in whore) there's nothing wrong with that. Is he a lawyer too? Did he address what MERS has done to obtaining a valid title to the real estate purchased? Try getting a warranty deed. (Don't pay attention to small details that can matter later when this all blows up)
MERS is a creature that sliced and diced ownership into so many bits and pieces that no one can tell you who owns the note and the underlying property. If a judge ever gets a bee in his bonnet and says that this scheme is totally invalid and it gets upheld all the way to SCOTUs, all foreclosures from the debacle in 2007 will be null and void. what a cluster that would be.
i'm not sure what kind of deed they're currently giving. my guess is quit claim or some other bs
i'm not sure what kind of deed they're currently giving. my guess is quit claim or some other bs
You were either kidding here and I completely missed the sarcasim, or you have no idea what you are talking about.
How about not listening to the opinion of someone who is trying to sell you something?
YWC.B:
One reason and one reason only - everyone extrapolates their current income to be able to cover their 30Y mortgages. What happens during colapse is that you lose your job, stop making payments, bank repossess. This is the game that the banks are playing now. This is why the big push for 3% down payments and liar loans again. Right before the crash and their planned repossession.
But in the inflationary scenario there is no collapse. Gubmints avoid collapse/default by producing inflation to enable them to meet their debt obligations with debased currencies. Savers are screwed, but owners of hard assets win. Right?
You can go ahead and buy the house to keep you low monthly "rent" payment fixed. (Remember, if the house value drops in half, your payment is still low, rates may go back up forcing monthly payments up anyway) just so long as you have enough PMs to burry under a freshly purchased rosebush for the back yard. PMs will hopefully hedge your debt. And if not- it will certainly hedge your down payment.
And yes, in a hyperinflationary collapse, it's like Zimbabwe where they had the #1 performing stock market for two years. (In local currency terms, of course). BUT, don't forget, the world's reserve currency debt=money. And in this collapse, debt will go unpaid meaning the money supply will collapse faster than they can hit ctrl P. Meaning that we might see deflation for a while first. Then they get a handle on the printing presses. All during which time- you keep your job.
since everyone is saying interest rates will go up (we know that they won't be raised)
ask the realtor what will happen to home prices once interest rates are raised?
the correct answer is that prices will decrease
The housing recovery is but a massive price manipulation backed by federal funny money that is being loaned completely disregarding risk in one of the most massive frauds every contemplated. It is beyond the pale of decency.
The banks and the federal government have essentially colluded to destroy the housing market through price manipulation and federal funny-money "loans" provided by a myriad of quasi-government agencies. The end result is a whole generation of young people who have signed up for home loans that are preposterous when viewed in relationship to the real value of the domicile they inhabit.
They cheated you, wholesale.
You're wrong.
How about explaining why, hotshot?
Well gee based on this reply, I don't know whether to live or die....
Hard to argue with those details, but I'm not sure I agree with the conclusion. The rules have changed. You have the right to be upset about the change in rules, or you can try to figure out a way to work within those new rules and make some money off of it.
I cashed out 100% of my 401k and similar to invest in real estate. I'm not flipping anything, just buying/building residential rentals. If values go down, I don't particularly care. If rents go down, I'll be bummed but they'll have to 'collapse' for me to get into trouble. If values and rents collapse, then I'm screwed. But all that means is I'll walk away and the bank will foreclose. Now that may sound like a crap attitude, but those are the new rules. I didn't make them, I'm just playing by them. The mortgages are all at a max 75% LTV (highest amount available on an investment property) just so that I've got less skin in the game.
All of the points above about changes in property taxes and problems with tenants are valid, but each individually needs to be assessed with respect to impact on cash flow. Here in Montana, there is no difference in property tax rates for owner-occupied vs rentals and the county appraises once every 7 years. Since tax changes affect everybody equally, they aren't going to change drastically. If they do go way up, it's because values have gone way up - ergo I sell for the profit. Bad tenants - it should take 2 months to get them evicted.
Keep in mind while some folks are complaining about the sky falling, other folks are out there making money.
A person just needs to go out there and do their own research. I find it much easier to understand the local real estate market (and the broader US real estate situation) than to understand the stock market. With the latter, there is way too much information that's not available to me and I'm always at a disadvantage relative to HFTs, Goldman Sachs, etc. The competition/dynamics with local real estate don't have these kinds of competitors where I live. There are lots of inside real estate deals going on that I'm not privvy to, but their significance in the overall market is nothing like trying to deal with the stock market's manipulations.
+1
Why would you "cash out" a 401k to invest in real estate? Too bad you didn't know about self directed IRAs. That would have saved you a lot on penalties and taxes.
Yes, it is unfortunate that I didn't know about this. Thanks for bringing it up, first I've heard of it.
The subprime housing market = reperations.
I still live in the house i bought 18 years ago. I'll still live there for another 40 years, God willing. I don't care if the price falls.
The banks do, of course. They've made a shitload of bad loans, and marked them to fantasy. They've also created and BOUGHT all kinds of exotic investments that bundled these shitty loans. go ahead. raise rates and watch the banks go down. I'd love to see it. fuck the bankers. they created this mess.
See they got the idiot taxpayer as the accountable party...so party on!
RIPS
TX is over blown bublle, espcially Austin, Round Rock areas. Hope it falls 50 percent or more. Time for the correction
Rents in Las Vegas are already starting to skyrocket - Investors are banking on this.
http://viewlasvegasrealestate.com/
Las Vegas? LOL...
its always interesting how people always just extend out the linear extrapolation. they forget there are mathmatical limits to how much rent can go up, and thus prices for a given level of interest rates, due to the fact that people only earn so much money---esp renteres.
renter-types are always the first to get laid off etc and have no savings---which again is odd how such a large amount of capital is built upon the shakiest of foundations/payers (renters). realtors will retort, they gotta live somewhere....and that is true but also includes, their cars, friends houses, parents houses, worse neighborhoods.
fracking and oil was the first ding, and now its a race between housing and auto as to which falls first, but they will both fall together as they are reliant on consumer finance...which has 0 collateral vs oil rights/equipment. once the lending spigot dries up, its over really fast. mix in a levered stock market and even the $4M homes start to sit, and cash buyers leave market. its not IF, only WHEN and secondly for how long. counterintuitively, if hillary wins it: wall st bailouts all over again (shes the status quo candidate), if trump or carson get it, massive BK all round. i'd like to know what dealings trump has ever had with GS...friend of foe?
2% inflation = Fed target, yes? 2% rise in home values and rentals over the very long-term is thus reasonable, no?
When a renter is running low on money, do you think they pay their rent or their credit card first?
The death of fracking? Good for my rentals. All of the young guys that left MT for ND are now coming back to MT. Obviously this is a localized phenomenon, but all of the negativity seems like some kind of analysis paralysis.
"When a renter is running low on money, do you think they pay their rent or their credit card first?"
Neither, genius. They squat on the property and let the interest accrue on the card.
Are you speaking from personal experience? I am.
Hey Tylers.... This R.E. Agent is getting free advertising on your website. This ok with you?
Doube bubble toil and trouble...
Meh! Tis just a flesh wound!
We have a systemic problem where more and more Americans do not earn enough money or can borrow enough money to spend enough to keep the numbers positive. And the rich people who have almost everything wonder what the fuck is wrong with us.
They know what's wrong, they engineered it. You can't really expect the rich to change the system when it's working just the way they want it to. If folks can never afford to buy, then they're stuck renting...
It's for the children. Yeap
It's for the children. Yeap
Kids of some friends just rented a 900 sq ft 3 bdrm 1 bath apt two blocks from the river, NYC. The river area is upscale but not their block, yet. So this building was gutted and refurbished. All new shiny shit and it is only $5000.00 per month rent, $1750.00 each. They were thrilled to get it. All three are recent college grads doing god's work in the financial sector.
Oh, yeah, five story walk up. You BETTER be young to live there.
The rats are cozy...
Isn't it useless to compare to 2007 origination levels? Down 65% from 2007 is probably somewhere near "normal."
There cannot exist a larger property bubble than in Silicon Valley; impossible. Yes, there are now large bubbles again everywhere thanks to a reckless and desperate Fed, but the San Fran one, dwarfs them all. When it goes, it will take Calif and the whole country with it. It is now so large and values so extreme, that millions will feel the pain when it pops. People who paid 2 or 3 times a reasonable price in bidding wars, will walk away. Their high-paying tech jobs are going away and automated burger shops won’t need them either. Fear will take over and the banks will demand bailouts. Foreclosures will again soar and people will see their leased Teslas and BMWs go away and become homeless, with no savings.
A crash is inevitable as prices are being bid to extremes that are off all the charts. Hopefully, when the collapse comes thousands of Chinese buyers will be wiped out, and after a decade of pain, prices will return to a level where new college graduates working at Wal-Mart, restaurants, etc, can again purchases homes.
When Magnum's Hawaii estate goes on the block 60% lower and w/ banks offering -1.0% 50yr foreclosure-moving mortgages,
I am all in.
". The economic boost to the economy from the lower mortgage payments is over. The Obamacare costs have spent the mortgage payment savings. The combination of declining real household income, overpriced homes, millennials with massive levels of student loan debt, and now rising mortgage rates are putting a halt to this fake Fed recovery scheme."
So... what you need to know is that this is the definition of a bubble. These are rentier schemes that are possible only because of money printing.
The most important structural thing to remember is that the US Dollar - and all other central-bank-issued currencies world wide, are the flip side of a debt's face value. A Central Bank (CB) puts a debt into it's asset column, and can then create the same face value of currency that draws upon that debt, just like a check draws on a checking deposit.
But unlike a checking deposit, the debts backing currency has an interest rate which cannot be paid from the same currency that it backs. Instead new debts must be taken continually within the currency system, so they can back the creation of more currency, so that the old debts don't go belly-up.
SO WHAT DOES THIS QUOTE MEAN?
It means that we have reached a plateau in the amount of debt the world can support...
It means that governments have to increase borrowing, because the public cannot... (or else the existing debts and the currency based on them will default).
It means that we are going to get mass inflation and then default, or we'll get just the default.
And from the problems plaguing the Millenials you can be sure it will be soon, because there is no new expansion coming from them, or possible from them, because the credit system was terminal before they entered it, and hence could not get started.
WITHIN A GENERATION, but likely within 10 years, though possibly at any moment, the world currency system will collapse, and trade will collapse with it.
OF COURSE...if they re-monetized Gold at a price that could back the currency, they could do a monetary reset. AND THAT IS THE ONLY WAY TO AVOID A TOTAL MONETARY COLLAPSE. THERE MUST BE A COUNTER-PARTY FREE METHOD OF PAYMENT WITH WHICH TO EXTINGUISH EXISTING DEBTS. Gold & Silver are the traditional answer...but it could be anything physical that people will accept.
Housing market will correct but not tank this time. Too many cash buyers this last time around, means far less distressed sellers. And they've made it so easy to sell foreclosures wholesale to hedge funds, they'll never even hit the market. Lots of pent up demand from people wanting to move out of parent's basement but have been priced out. And never underestimate government meddling.
Housing could get much much worse, for instance the Mexican renter voter majority in CA could vote to rezone the entire state for tract housing and construction employment and strand millions of sub-prime bankers in foreclosure hell by building millions of new quality homes for 25% the cost of the current homes book values.
I'm talking housing @ $65/ Sq foot, a 2000sq home selling for $130,000.00
What does that do to the $65/ Sq ft home priced at $300/ Sq ft in debt?
That's right.
What if the Mexicans vote to leave the US without the debt?
In 1990 I owned (buying on mortgage) a house I reckoned was worth 80k Pounds. A couple of years went by and I wanted to sell it so I could move into my girlfriend's place. I put my house on the market for 90k just as the housing decline started. After a year and a half paying shitloads in monthly payments on an empty house I finally sold for 50k.
I made the money back later as house prices went back up again but it really opened my eyes. Don't automatically expect prices always to rise.