[eno_]

Our housing bubble is not nearly so huge as that in the U.K. and Germany to name two. So the fall will not be that hard either. Some really frothy markets like Silicon Valley might become a bloodbath, but Main Street USA will not see a big crisis in this.

[AdA$tra]

So the fall will not be that hard either.

May effect a few over-financed individuals. I think that long term, the graph will still go up and to the right.

[LS]

This is purely anecdotal, but here in the southern Ohio (Cincinnati/Dayton) growth area, home prices have been stable for YEARS and houses sell pretty fast. Just last week there were about 4 in our neighborhood. All sold. They are all selling at about purchase price, so I don't see (and never saw) the "housing run up" this article talks about except in California.

It is something of a myth, though, that Americans "don't save." Most Americans have medical covered through "forced savings" at work; they have retirement handled through "forced pensions" and Social Security---rightly or wrongly, they contribute money that they might not otherwise, and that IS a form of savings; and homes are usually a reason people save---but if mortgage interest deductions makes it logical to purchase homes on time, the incentive to save for that is gone.

When you factor medical "savings," pension and SS "savings," and the mortgage interest rate factor (and I have seen a study on this), guess what? Americans save about as much as everyone else. Now, granted, some countries have "forced" savings that exceed ours, but usually not private medical or retirement plans. If the main three things people "used" to save for are now handled by "forced savings," saving does not become that important. My parents saved to buy 1) a house; 2) to retire; and 3) for medical emergencies. Well, those things are all dealt with differently now. I'd prefer to go back, but it is delusional to pretend that the "forced savings" do not exist or are not having real economic effects.