[quote=Bugs]I haven’t been around for a while. Have you guys discussed the possibility of the incomplete return-to-trend yet? What happens if the current correction cycle stops short of returning to trend and starts into increase prematurely? Do we set ourselves up for another even more devastating round of losses or is the general concensus one of no blood – no foul?[/quote]
Bugs, nice to hear from you. I think that, just as govt intervention in the US housing market back in the 1930’s and 1940’s (Fannie and Freddie and 30-year fixed rate mortgages) permanently moved home prices up, and home interest deductibility did the same thing, so what’s happening now marks a permanent increase in govt support for high home prices.
How much higher? Too hard to tell. We won’t even know for sure which of the new govt home price support programs will become permanent until maybe 5 or 10 years from now.
