It seems to me that the majority of recent buyers had mortgages that were higher than the place that they came from or than the actual market rental value of the house/condo they purchased.Many people spent over their heads more than you will ever believe. No reasonable landlord would have rented to a huge percentage of these people at the debt to income ratios they were achieving with stated income and fudged loans.
Many loans were package deals with seconds on top at a higher rate…like 10%. Recall how many of these defaults are happening before the reset? Condos had homeowners fees and property tax at least half of fair rental value. Yes there are instances in single family homes where the teaser rates worked out lower and some builders were paying the first six months mortgage and such.In General Spending was artificially high because of MEW not increased cash flow due to teaser rates. That spending has come to a screeching halt. I don’t see where spending comes from in the near future at all.