>>We gloom-and-doomers here on FR have been predicting and detailing the consequences of the inevitable crash of the housing bubble for years. They’re only now starting to come to pass.<<
I read a few months ago that crashes always take longer to arrive than people expect, but when they do come, they unfold faster than people expected.
But Fed action and the press are slowing down the inevitable, pulling out all the stops. It is actually acting somewhat towards the economy as Hillary is acting towards the Democratic nomination. They both seem to have a “scorched earth” defence plan unfolding.
Problem is, that never works. In the long run, it only makes things worse.
You’re right — some of what is being done is prolonging the necessary and painful.
Some of what the Fed is doing is preventing complete lock-ups in debt markets.
Anything that props up the price of housing is preventing the necessary and inevitable.
Propping up over-leveraged and illiquid banking positions aren’t necessarily bail-outs - if the credit markets lock up and cease functioning, a whole lot of other crap will hit the fan - and quickly. So the Fed has a job under their “open market” mission to keep the debt markets functional.
People are going to learn, the hard way, that housing is an asset just like any other. The propaganda from the NAR, et al, has to be firmly and finally debunked (matter of fact, the NAR should be investigated for fraud and deceptive marketing practices). Housing isn’t exempt from being over-valued simply because you can live in it.
The reality of what has happened in the last 10 years in the real estate markets is this:
Mortgages turned into margin loans. Housing bubbled, then peaked.
And now bankers are realizing that they don’t have a way of making a margin call on real estate.