Sure, for every house sold, someone cashed out and reinvested right back into RE at a higher price. When they realize that they can’t cash out anymore, and their ARMs reset at double or triple their current payments, and they can’t refinance anymore, then you’ll see the real pain. When economic stagnation sets in and the Fed have to hike interest rates to defend the dollar then the pain will be accelerated.
I know some people in this boat. Very few households can “afford” to carry 800k houses but that’s what has been selling. Even when those houses go back to 400k, the number who can truely afford those homes would still be the same.
