In 2005, even by the end of 2005, it was apparent that housing prices had gone too far up, but the seriously loony loan-writing was just starting. The 2006/2007 vintage of loans was the seriously stupid stuff, coupled with insanely high prices.
I was one of the early people here on FR to start warning of potential home price devaluation (and I was warning of only as much as 15 to 20% - nowhere near as bad as it has become) and then only after March of 2007. The winter of 2006, I started taking notice seriously and working to understand all the inner workings of the mortgage market, in particular answering the question “WTF is a CDO?” It took me seeing the data coming out in late 2006 that there was a whole new class of borrower who defaulted on their mortgage from the very first payment due in 2006 to convince me that the turds were going to hit the turbine blades.
If someone says they didn’t see it in 2005, well, they’re with the vast majority of people. If someone says they didn’t see the banking cluster-(*&&^ coming by September of 2007, then they were dumber than fenceposts. The events of 2007 laid it out for everyone to see that it was going to get bad.
In 2005 sold a duplex for 30% profit and built a house in 2006 which has lost 30% in 5 years.
Should have put my funds in a Cayman bank;) LOL!!
It wasn't until the dam broke in the sand states that we found out how truly awful many of the loans were. They were loaning big money to people that had no income. Unless you were in the industry, you wouldn't know that was going on. If you would have known that, your figures would have been adjusted downward...