Paper Economy - A US Real Estate Bubble Blog: Any Predictions?

Paper Economy - A US Real Estate Bubble Blog: Any Predictions?

I think the housing market will continue to drop until the foreclosure crisis is over, this will happen, when the Banks finally DO something to get out of the vicious cycle once and for all, just like in 1996.
Right now, they are just being difficult in processing short sales and cutting losses for everybody hence properties are being foreclosed at a fast rate.

At some point they need to take all their foreclosed properties, package them and sell them at $0.50 on the dollar, take the hit (which will likely be somehow transferred to our ever increasing deficit, inflation will increase, the dollar will loose value, this will make our products more competitive in the global market) then with the market at a healthy price level (probably 5 to 10% lower than what it is now), with no foreclosed properties casting a "ridiculous price" shadow on the rest of the market, the sky will be clear, the prices will stop dropping, the real estate market...slowly but surely will go back to being the great solid investment that it has always been.

Remember, this is a 10 year cycle, with 5 year memories.
All the "chicken littles" are coming out of the rocks and trying to convince us that the world is going to end.
This happens in every down cycle
In a few years, all these "crows" will go back to their caves, while the market flourishes again.
Cycles have always been a part of real estate as a part of any market, and they will continue to be.

Don't worry world!.... life is great and the sun WILL come out tomorrow!

I invite you to also post your opinions in my blog: http://houseinsandiego.blogspot.com