The housing crash was nothing more than a bubble bursting. A correction, if you will. Overbuilding, and yes, questionable loans by banks. Not necessarily to customers with questionable credit, but to builders and construction companies and also to people speculating in the market. “Flipping” new construction etc.
I have an acquaintance who is a builder. Got stuck with a couple of houses. Told me that only way he could keep from going broke was to keep building. How many neighborhoods do you see where infrastructure was built and construction never started. There was no real demand for housing, just speculation. Many people made a lot of money during the bubble. Like any bubble. Those that got out in time are still doing great. Those that didn’t went bankrupt. And the banks got bailed out.
Treating your personal home like a commodity instead of a place to live was a huge part of the problem. If you are using your home as a place to live who the hell cares if you owe more than the market says it is?
Average home prices as a percentage of income are basically unaffordable. Low rates and long terms make the payments somewhat doable. Unless something happens to your particular situation. Sickness. Loss of job. But ultimately you are not “stuck” with anything. The bank is.
The “housing crisis” should have been allowed to be worked out by the market. It would have been corrected by now. Government intervention just prolonged it. And when a correction inevitably comes it is going to be a hell of a lot worse.
DING! DING! DING!.........WE HAVE A WINNAH!....................
Overbuilding is on mach speed in Seattle according to my (construction working) son....he says another crash is coming....