[quote=SD Realtor]If we actually had a free market all of these homes would have gone to foreclosure, prices would have crashed and housing would become affordable. Unfortunately that is all theoretical because we all know that we would have a collapse of the financial system and our society would have some very serious problems in that scenario.[/quote]

SD R, you are so right about everything, except….

If prices were allowed to crash, there would not have to be a collapse in our financial system. For example, if the govt identified the 60% strongest banks and other finl insitutions, and supported them, and let the rest go to the wall, we would do fine. (Have to guarantee 90-99% of the obligations of the ones that go to the wall during the unwind.)

Yes, a lot of money would have to be printed quickly, but isn’t that what’s been happening slowly for some time now, with no end in sight, and endless moral hazards and unfairnesses and economic inefficiencies in the name of postponing pain?