It will take a few years for the sub-prime machine to go anywhere fast.
If Democrats hold power in 2016, QM/QRM isn’t going anywhere. If GOP gets into power, Fannie/Freddie will likely get privatized with attendant disruption to the loan markets.
Why do you need a 30% decline to profit?
Say you bought a home in 2009 for $300,000 that’s now worth $500,000. You can get $200,000 profit out of selling it, less a few grand if it’s an FSBO. Say you end up with $190,000.
Prices drop 15%. Similar house is worth $425,000, which you buy with 20% down. Assuming $5k closing cost, you’ve only spent $90,000 of the cash.
You could probably also take the profit via a refi, but then you’d be close to being underwater if prices drop.
