Why will it come? This article has the details – I’ll nutshell it:
The tax credit temporarily kept afloat a housing market which is still over-priced. Now that this has expired, the combination of foreclosed properties held by banks (the “shadow inventory”), tighter loan requirement, Fannie/Freddie continued insolvency (you did note they were de-listed from the NYSE, right?), and another huge wave of ARMS to adjust in 2011/12 ensures that down is the only way housing prices can go.
All of this, of course, has been discussed here and at my personal blog over the past few months. I just wanted to re-state and re-emphasize it: the second leg down for housing is coming (in fact, its already here – I’ve seen big drops in housing prices in Las Vegas, already; my guess is that my own house is now worth $150,000.00; a drop from about $170,000.00 a couple months ago) and there is no way to stop it. If Obama and Co renew the tax credit – still a possibility – all they’ll do is delay the ultimate crash a trifle.
In the long run, while this crash is bad for the economy and bad for people who already own homes, the drop in prices will make home ownership a real possibility for ever more Americans. Once we do throw out the cretins currently running our government, we’ll be able to implement some rational economic polices and get things moving again – but without the steep rise in housing prices we had over the past 20 years or so.
That is all done with – and done with, I think, for good; the demographics just don’t allow the huge demand which fueled the bubble, and stricter underwriting makes it less likely that people will buy houses on speculation. A better America will emerge out of this morass of debt and incompetence. Not while Obama is President, but once he’s gone – then its off to the races for us, as America comes roaring back.
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