Forcing these home owners to move into rental’s that will be considerably cheaper and therefore opening up more of their income to be spent on other things? Not to mention the declining home prices will lower mortgage
I don’t think so. Basically a large part of the reason prices are so high is that the buyers were in effect living cheaper than rent. The Neg-AM loans and ultra-low teaser 1 year ARMs essentially had people buying large houses with a money payment that was less than rent.
On top of it, they did negative savings and tapped their equity to increase spending above their income level.
What I see happening is a large wave of people getting moved out of their SFRs and into a smaller cruddier rental that actually costs them more per month than they’re use to paying for the home. Not because rents are high, but because the credit bubble allowed them to refi so easily into a temporary low payment.
I have a feeling the bitter renters the bulls like to call housing bulls will really show up in one to two years, when over extended prior “owners” take a giant step backwards in their perceived quality of living and potentially pay more per month for it and have less disposable cash.
