The housing bubble was tulip mania. Speculators buying houses to flip, just because they landed the financing; families who bought ridiculously overpriced homes, just because they landed the financing; homeowners upgrading to McMansions, just because they landed the financing. Do you see a pattern? If the loans had not been available, the bubble would not have happened. But bankers and lenders saw short term profit and didn't care about the long term consequences. Everyone, from the bankers to the families buying homes to live in, justified their risky venture with the assumption that the bubble would forever inflate. Home prices would continue to appreciate 20% per year. Apparently no one ever actually took the trouble to multiply the numbers and conclude that sooner rather than later, people would stop buying houses that cost more than 10 times their yearly income.
Prices will not bottom out until they reach the point on the curve where they would have been, had there not been a bubble. To find that value, just calculate the average rise over the last 25 years, then extrapolate to the current year.
“The housing bubble was tulip mania. “
Not quite. Tulips had little or no intrinsic value. Houses do. Cramer is probably right, six more months to clean out inventory and cure the foreclosure gap and housing ought to be stabilized. Maybe.