This does boil down to a household income issue and consequently an employment issue (it always did). From 1997 to 2007 the bubble in home values did not reflect solid wage increases but a flood of easy to get loans where a pulse was the only requirement to buy. With all of that removed, we have had 5 million completed foreclosures and trillions of dollars of faux equity evaporated into thin air. Prices are back to levels last seen a decade ago and 10,000,000 homes are underwater with another 5.8 million in foreclosure or with at least one missed payment. All of this in spite of historically low interest rates and low down payment products like FHA insured loans.
Read it at Dr. Housing Bubble
What if housing doesn’t recover for another decade? When the young cannot afford to buy a home from their parents. The reemerging trend between the US and Japan housing bubbles.
Three months ago I remarked, Don't Rush to Buy a Home! Today, prices are once again declining and mortgage rates have hit a new record-low. With the employment to population rate hovering at multi-decade lows, while wages and work hours stagnate, the picture for the next couple years isn’t looking any brighter.