Us renters will help prop up house prices in the near future. I’m talking about those of us who sold at the peak (2004-06) and now are renting and sitting on large piles of cash. I don’t think we are in the majority by any stretch of the imagination, but we’ll start buying at some point (the smart ones will wait more than only 3 or 5 years).

This is why it is said that speculators actually provide a public service by making markets less volatile… See, by selling at the peak we made the peak a little less, and by purchasing on the way down, we’ll make the trough less deep.

When we taught this in a microeconomics class in college, many kids were shocked: they had been taught that speculators are always evil people. The point is that markets work, and capitalism explains why some countries end up like Cuba or the late USSR, and why others end up super rich like the USA.