Why This Housing Bust Is Worst Ever: The American Dream Ends

If you compare this real estate downturn with the last three or four, it's obvious this one will be longer and much more painful. I've been involved in real estate since the 1970s. I don't see a rebound until any earlier than 2012.

Once you become an Author the hype gets bigger. The downturn in Colorado in the 80's was much worse than the current downturn. Nationally the 70's, remember 18% interest loans, was as bad nationally as today for different reasons. This entire housing market will not correct completely until consumers feel comfortable. That will require a pullback in oil. Where do our two Presidental candidates stand on this? Out in the field!

This entire conversation is limited to a few hot markets on the coasts. Most housing markets are either flat or down 5% at most. As usual, the media are blowing everything out of proportion to generate excitement and attention.

The American dream became the American nightmare when prices for a three bedroom home rose to a half a million dollars. Home builders chose to stop building homes for the average schmuck. What goes up must come down. The good news is that the price of single family homes might once again come into reach for the over 100k working stiff. If you earn less than that per year Walmart has tents on sale this week. Good luck trying to find a place to pitch it.

Deedo - The difference here is that this is largely self induced by builders who didn't know when to stop, whic was fed by demand by lenders willing to give money to anyone with a pulse. The cold, hard truth is that not everyone "deserves" to own a home. Remember when you actually had to qualify for a mortgage? Remember downpayments? Remember having to bring in bank statements, pay statements, etc. when meeting with a lender? Until we get back to that level of sanity in lending and burn off some of the excess inventory that was brought on by this mess, I doubt we'll see much recovery. Another point folks: A mortgage is a freakin liability!!! When was the last time you heard somebody whose goal was to actually pay one off? Stop treating your home like an ATM, and you will make some headway.

Actually the American dream was intended for the rip-off brokers and lenders. For the buyers it is an American hoax and nightmare. About 3 years ago I admonished a friend about the coming oil and housing problems. I had predicted to her gas at $5 a gal by this years end. She had just re-fied her house back then and they dishonestly overvalued the assessment by $40,000. They walked away with $6000 in cash. Left her with an $1800 monthly mortgage which yet has to re-set for the arm. The pity is, she is a 73 yo retired schoolteacher of more than 33 years. THIS IS AMERCA FOLKS!!!

Part of the problem is that these stories treat real estate as a national market. Real estate is local and there are pockets showing stablization and even slight price increases. Very few banks will underwrite a mortgage on a condo right now, even with an 800 credit score if there is less than 20% down. A 90/10 loan with an excellent credit score is a loan that has been given for the last 30 years and should not have disappeared with the subprime mess. These weren't the loans that caused the problem! Greed will enter the market again as there is money being left on the table that shouldn't be left there. When that happens, the supply imbalance will adjust and real estate will stabalize nationally.

yes I go down 5% to 10 % more however that time the bottom is almost fathomed and start to recover,at the moment there is some good State that the housing downturn will not affective immune to the pattern of recession in this current situation.

Homeownership is a dying ideal, an idea that will be gone with the wind. Just watch that video carefully, Barbara was saying home prices could drop even more if unemployment goes up. Hmmm, in a world where jobs aren't stable and transportation costs are going up, does it make any sense to own? The fundamental mismatch between paying for a house note for decades while staying at a job for a few years is coming to a head. Even if one does find another job in the same city, the commute to it could be far enough where your transportation costs bleed you white. There are some forecasts where a barrel of crude is going to $200. What does that do to people's commutes? The road to survival lies in being flexible where one moves around with one's job to minimize commute distance. People who follow such a mobile strategy will thrive, the ones who stubbornly hang on to their homes will suffer.

I agree with swivel 777. The media thrives on "fear". And unfortunately, people LISTEN to the media. The media is as up and down as the stock market! Yes, times are difficult, the dollar is weaker, but in general, the economy is "strong". In other words, America is really hanging on, considering what has happened. Look at the the Stock Market! it's staying above 11K. If America would stop listening to the deception of the media, things would be much better than they currently are. But I don't see this happening.... (sad).

Many people still feel that their home is an important source of com-fort, pride and safe haven. The vast majority will not walk away from their homes if they have other stability like family & friends & well established networks. To most people these are just another episode of "bad times". Housing cycles rise & fall. The hardy just "go" with it. Sometimes that's all you can do. People are still buying & selling homes, as the need arises.

Complete BS. Where are the facts? Did she ever hear of the Depression or the 70s. How's the current job market compare? Factually - pretty well. Some consumers make bad investments in homes and all of a sudden it's everybody else's fault. Nonsense. How about getting a real, objective commentator on the show.

Amen, Phillip! Unfortunately, there is more than just a grain of truth in what Corcoran says regarding a greater willingness to just walk on a mortgage. As a leading-edge boomer with Depression-era parents, I share your values and I fear that this is just another symptom of the lack of personal responsibility that seems to be endemic in our society. Add to that the total lack of political leadership from either party--people who have the guts to do and say tough things that are for our own good in the long run--and I am truly concerned about what is in store for my kids and future grandkids.

The bottom in real estate is still many years off. There are several major problem areas that could cause prices to collapse: the looming or on-going recession (depending on who you ask); the credit crisis; inflation; and higher interest rates. This recession will probably be a deep and protracted L shape recession which is bad for housing. The latest estimates from the IMF say total financial write downs will be $1 trillion (Bridgewater Associates estimates $1.6 trillion) so it is very likely that we are only about one quarter of the way through the credit crunch (roughly $400 billion in total writedowns to date). So another big negative for real estate and the economy in general. Inflation is slowly getting out of control which will ultimately lead to much higher long term interest rates. Again, this is extremely bearish for real estate as prices will have to drop to offset the rise in rates. I'd agree with deedo that best case is probably 2012 before we see a bottom in the bubble areas and it will probably be a painful ride down with prices plummeting in many areas.

Talk about "orthodoxy", nothing worse than lifetime professionals real estate platitudes. The whole RE market is propted up on massive tax breaks and favors for 75 years, it pushes credit beyond reason and they a "shocked" by recent results? The reason there is no bottom is the neanderthal culture of banks holding inventories of both houses and bad loans. The government certainly enables this and RE owners like it as well under the fantasy that it creates market order. It can take over a year from the foreclosure to sale through a process that is only marginally favorable to new buyers. All very tedious and drives buyers away. Sell the foreclosures and inventory quickly, write off the bad loans and move on. The talk of "rescue" is a joke. Give people housing aid but bar them from most credit extensions but we should foul up the market even more than it already is.

The bottom in real estate is still many years off. There are several major problem areas that could cause prices to collapse: the looming or on-going recession (depending on who you ask); the credit crisis; inflation; and higher interest rates. This recession will probably be a deep and protracted L shape recession which is bad for housing. The latest estimates from the IMF say total financial write downs will be $1 trillion (Bridgewater Associates estimates $1.6 trillion) so it is very likely that we are only about one quarter of the way through the credit crunch (roughly $400 billion in total writedowns to date). So another big negative for real estate and the economy in general. Inflation is slowly getting out of control which will ultimately lead to much higher long term interest rates. Again, this is extremely bearish for real estate as prices will have to drop to offset the rise in rates. I'd agree with deedo that best case is probably 2012 before we see a bottom in the bubble areas and it will probably be a painful ride down with prices plummeting in many areas.

This article presents a ridiculous notion. After hyping up the boom and pricing out many well-intended buyers from their house purchase, this bust is supposed to be a bad thing? I welcome lower prices. Lower prices are good for everyone, especially first time buyers.However, existing home-owners (lower taxes) or people looking to move up (gap is smaller b/w different price tiers) also benefit.

While the housing downturn is no laughing matter there will be enormous amounts of humor in the justifications for property tax assessment increases that will be coming shortly from local assessors across the nation.

If you value your neighborhood, reduce the foreclosures within your area. Stop giving the banks money and help the ones that move the economy… the people. The feds lowered rates and the banks raised rates and stopped lending. Flow of money has stopped. Stop the banks from making up all those paper losses’. Looking at their numbers makes it look like 80% of America is in foreclosure and out of work. Help those that wish to keep their homes and sell the ones that don’t. Most of the homes on the market were by speculators. That is why they are all empty! They went somewhere to live do not you guys get it by now. Everyone blames subprime, but it was really investors (speculators) driving the market… just like what is happening now with fuel/energy. And they wish to fool you into thinking it will go down if we drill more within our county, 5 to 10 yrs from now…. why do you think so many are jumping on the oil wagon. Not because it will get cheaper…. wake up!

Talk about "orthodoxy", nothing worse than lifetime professionals real estate platitudes. The whole RE market is propted up on massive tax breaks and favors for 75 years, it pushes credit beyond reason and they a "shocked" by recent results? The reason there is no bottom is the neanderthal culture of banks holding inventories of both houses and bad loans. The government certainly enables this and RE owners like it as well under the fantasy that it creates market order. It can take over a year from the foreclosure to sale through a process that is only marginally favorable to new buyers. All very tedious and drives buyers away.