Quote:
Originally Posted by GregW
I do not believe the banks are hoarding cash or that the housing prices are artificially deflated. I think the banks are holding reserves for the eventual collapse of the CDO speculative market and that housing was artificially inflated far beyond the 2.5X the local mean income during the 1990s. This speculation created a massive surplus of McMansions designed to be speculative investments for the growing financial class (100 to 250 thousand dollars per year DINKS). There were very few working class (40 thousand per year) houses built.
In my local overpriced market the average income is about 100 grand but the average house price is still about 400 thousand. There is still plenty of room for deflation in our town. In many places in this country you can get decent 3 bedroom older houses in the 100 grand price range. Just bring your own job or independent income.
I believe we are going to see not only a massive drop in the sales of gussied up pickup trucks and SUVs posing as family cars as 50 thousand and under jobs continue to be replaced by off shoring and automation. Most people in that income range cannot afford to buy late model (2005 and newer) used cars. The mass market for 40 thousand dollar pickups will be limited to commercial sales and those will not sustain four mass production auto manufacturers. The money is just not available in the working and lower middle class markets.
The money for real mansions and second or third homes is plentiful although the number of buyers is more limited as mid and upper level management positions are being sharply reduced. The very top of the income scales will increase their income and there are just enough to provide a market for million dollar house in exclusive gated and resort communities. This group will also support the very top end automobile (Ferrari and others) and other luxury goods and services.
Same old situation typical if the pre WW2 economy has returned. The Haves and Have Mores will get and keep More while the Have Little’s will get less until they lose everything and drop to the Have Nothings. This is the natural result of an economy created to serve a financial and political aristocracy that controls the markets and the politics with their wealth
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The 'Haves and Have Mores' - Bush's 'base' made off like bandits during the entire financial scam of inflating and deflating the real estate bubble.
If you lost out - you now know you are just 'Little people'.
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