http://money.cnn.com...x.htm?hpt=hp_t3
Here's why:
1) It's not just foreclosures, but there are many more homes waiting in the wings of banks who've kept them off the books
2) There are even millions more dilinquent mortgages being added as prices fall, and people who have been barely hanging on, just decide to say to heck with it, and default.
3) Default has become extremely and much more widely accepted. People also see people living in their homes, mortgage payment "free" for years, due to the obtuse mortgage foreclosing process by banks and the "legal" system.
4) Boomers are just beginning to reach retirement age en masse, and since this is secular, and you ain't taking that house to the grave, including millions of "second" homes, boomers bought as "investments", so with prices declining, and many boomers so called "wealth" tied up in their abodes, rest assured this downward price pressure will persist for years, just as the upward buying pressure persisted for decades prior to this when boomers were buying. Now they are retiring, and soon dying. They are choosing in many instances to SHED that PIA home, that has sucked their $ for years with maintenance costs, lawn mowing (a pain), yard upkeep, multiple years of home improvements, and years of EXTREME home makeovers fostered by the TV shows, and the Home Depots, and the Lowes. And so the demand for retirement homes, condo's, apartments, anything that doesn't require all that upkeep, and makeovering, boomers will be setting new secular behaviors just as they always have.
5) TOO MUCH DEBT. Every bit of this housing boom, was debt financed, and everyone was over-extended but they just largely didn't know it, thanks to years of Alan Greenscam, and his perpetually, and unrealistically, artificially low interest rates. Ben Bernanke has continued this fabrication of perceived "wealth", and continues to make the mistake of interest rates that are far far too low, which in turn actually devastates the market further, because his crap theories continue to obfuscate true price discovery. I'm seeing homes listed for $500,000 here in the middle of corn fields, with a lake and 25 acres, and those properties should be going for no more than $250,000 given their terrible locales, so its a long long way to the bottom, and the fools who went nutzoid building all these properties, and habitating land that should be left to the animals, or farmers, will get their clocks cleaned by Bernanke's policies. Only greater fools will buy those properties now, thinking they are somehow "good deals."
6) Jobs and wages for those who have them, continue to decline due to immense and on-going substantial increases in machine oriented productivity improvements. Its not about labor productivity increases, but all the technology and machine productivity increases. This will persist and grow, driving many service sector jobs and the few manufacturing jobs out of existence. The internet, and hi-tech, has fostered globalization, so the globalization is bringing about the essence of $2 per hour jobs in China having the influence locally in many American cities, as if those jobs were right here next door to us. US Companies can keep the wage pressures on a downward stretch for years with all the computer, software, and technology development going on. It may keep their profits high too, but that doesn't necessarily translate to more jobs for US workers. Fewer jobs, lower paychecks = less ability to afford the currently high priced homes.
7) Everything can be produced at much lower prices these days, with newer and different materials. People realistically can go back to living in 1500 sq ft homes if they are built and designed properly, and the smart builders who can figure out how to do that using technology to mass produce the homes off-site, and then ship them in modular pieces, will be the builders that prevail. Too, they will design them to use 50 to 75% less energy than current designs, which are dated, oversized, bloated and used 19th century materials and concepts. Existing homes can be revamped only so far, and the debt and the homes will simply be written off by society at large. The trillions that the Fed has scarfed up, and taken "off balance sheet" will eventually be written off, never to see a dime again on the open market. Its vaporized debt, being spread amongst all holders of the US dollar currency, and amongst EVERY single debt holder that exists on the planet. Everyone thinks its a "trick" or smoke and mirrors, but its not when you can illegally print money, and do the QE, and other shennigans that Ben has been doing and the Fed has been doing for decades.
Smart people will figure out how to find homes that are no more than $125k to $150k, and be exceptionally advanced in terms of energy efficiency and use of space, and those will be the middle class who are lucky to have wages. Smart cities and developers will supply those types of properties, and homes, and render obsolete our current bloated ways of living.
Whole towns that have been abandoned, and property that has become dirt cheap, will arise from the ashes with a completely different way of being run, not run by hacks and people who desired and politicked for "lifetime" security in government and muni jobs that could be done now by 10 year olds, but are cronied into 30 year positions with obscene pensions. Pensions now will be wiped out, and cities doing things the old way will be wiped out too, because people simply will no longer tolerate absurdly high taxes, absurd and disgustingly high college degrees , 90% of which are worthless anyway, and only another means to put people into an absurd amount of debt that can never be repaid with the $40K per year jobs that barely allow for living above poverty level.
Technology, innovation, adaptation, ingenuity will prevail, but in the meantime, prices on existing homes will continue to decline for decades. We are going to "clean house" and run our existing government, and bloated practices out of existence.
Just watch. I personally, am going to be a facilitator of this in my evolving career, and I have the wealth, means, savvy, sales skills, engineering background, political skills, and practical nature to accomplish this. I'm going smoke a lot of people's arses who have corruptly ridden this country into the ground with their cronyism, debt practices, unethical means of doing business, and entire towns, cities, and so on, will see a new beginning unlike anything they've ever witnessed because they are desperate, and dying, and floundering under the weight of the old and corrupt regime. The Obama's, Buffet's, Soros, Bernanke's, Geithners, Gingriches, Clintons, Bushes,Trumps, Jobs, Gates, Daleys, Emmanuels, Lays, and thousands of other corrupt Wallstreet banksters of the world who have usurped all of mankind for the past 3 decades will become largely obsolete dinosaurs that have represented unadulterated greed, corruption, and immorality that has brought down this country. I'm only 50, and I will commit everything in my power to see to it that it happens in my lifetime, so all Americans will once again have the opportunity to live their lives well, with health, and within reasonable means, that has been stolen from them by the obscene practices and unethical behaviors of our current governments and leaders since the 1960's.
Meanwhile all you dumb mofo's who wish to keep buying homes, thinking they are low priced, have at it ! Im going to watch you squirm and lose all your ill-gotten wealth just like you sucked it out of every American who "invested" into the stock market, or bought these overpriced homes unwittingly, and not comprehending how the Federal reserve and their own government sought to impoverish them for generations, slaving them with debt. Those cronies are now going to EAT THAT debt ! Of that, I can assure you.
