Tone, I agree, what allowed this bubble to inflate beyond historical proportions was the loosening of lending standards.
I believe eventually we’ll get back to the traditional standards of 30 years, fixed rate, good credit, having to qualify according to your income, etc. Once that happens, how many people can really afford a home for $500,000? As more lenders get burned, they will tighten standards, further decreasing the buying pool. It’s happening now, and will continue.
Years from now people will look back on all of this, at no doc, stated income, teaser rates, neg am, to anyone (yes, ANYONE!) getting a loan, and ask what the hell were we thinking?
