1.The baby boomers are done buying houses to raise their kids in.
2. Part of the recent runup in prices was due to bubble behavior in lending, and due to Mexican illegals buying houses on no-doc lending, and people buying houses on spec. Those days are gone, and now there is a surplus of housing as laws are tightened on illegals (e.g. Oklahoma, Arizona) and as limited sanity returns to lending practices.
Illegal Mexicans, anybody with a pulse and even some documented cases of people without pulses.
Loan brokers generated worthless mortgages to SELL to gullible Wall Street investors.
The worthless mortgages included not only Mexican illegals but solid middle class folks with good middle class jobs that bought $400,000 houses with $800,000 of borrowed money that they could never afford to repay once the "interest only" grace period expired.
Three years ago, FR real estate threads were flooded with such people.
They all claimed that the worst that could happen was that, once the "interest only" grace period expired and their income did not magically jump to make principal PLUS interest payments possible, they would simply sell the house for a cool $1 million and laugh all the way to the bank.
My youngest just turned 21 today. I have plenty of "house". It would be nice if two of the "kids" would vacate for their own digs.
No, but they - we - are interested in downsizing to retirement houses in congenial locations. Money to be had there. I found out the easy way - lucked into it. ;-)
Some ofwhatyou say is true. But there is no possible way someone without a credit history and a low to no down payment like illegal aliens received loans. No mortgage lender would loan them money without the ability to track their past residential history much less credit history with no guarantees where they would be living in the future. Now sometimes legal family members may have purchased it in their names. But even at the high point of the lax lending streak no bank would have given hundreds of thousands of dollars to just anyone off the street who couldn’t even prove who they were.