“This is one of those self-fulfilling prophesy type things, isn’t it?
The other question is who, if anyone will pick up the $2 Trillion in lending opportunity that the big boys turn away?”
The way you phrase your questions betrays what you think the answers are. Saying that something is a “self-fulfilling prophesy” makes it sound as if it is caused by irrational psychology, not rational fundamentals.
I do not think that the downturn in prices in CA, and other states that saw price increases above the rate of wage increases, is caused by irrational psychology. I think this downturn is a return to rational fundamentals. It was the prior massive house price inflation that was the irrational self-fulfilling prophesy: “Buy now or…”.
Calling a possible action an “opportunity” makes it sound like the smart thing to do. I wouldn’t call applying a sharp serrated knife to my fingers an “opportunity”. I’d argue that banks have been lending $2 trillion a year that doesn’t make sense, to fraudulent borrowers putting down no money of their own, on houses appraised well over their value. Now the banks are stopping because they are getting called on the nonsense. That’s what that $2 trillion “opportunity” looks like. Anyone who wants to step in and continue the fraud-ridden and completely noneconomic lending that went into that $ 2 trillion can do so, but I wouldn’t call it an opportunity.
