Hyman

28/36- Why House Prices Must Fall

This excellent article totally hits the nail on the head. We have been game playing with "creative" mortgages for the last ten years, and now economic reality has finally crashed through the illusion. The credit pendulum will soon swing past what we had 10 years ago, and all these old mortgage loan formulas will be back. The result? Prices will plunge down to what the local wage earners can actually afford to pay. We are looking at 35%+ drops in home values, back to around 2001 levels or even lower. The situation could be much worse for California, Florida, Arizona and Nevada home owners, who have seen the maximum real estate bubble effect over the last decade.