Housing will never, ever heal. Well... not in my lifetime.
Anybody that buys a house is giving away their money... by extension, anybody that pays a single dime in mortgage or property taxes on a upside down mortgage is giving away money.
(Actually, there are exceptions. Locales with low-priced homes with land and low property taxes are probably very much worthwhile... as a percentage of the land mass, these are the majority... as a percentage of assessed or perceived value these are the extreme minority.)
The Banks do not want the properties back. Why would you continue to pay them?
I am not offering advice... I am asking a rhetorical question.
Most student loans will absolutely, positively default. Why should you be one of the few that pays your student loans back? (Again, that's a rhetorical question - not advice.) If I were in hock for a couple $100k in student debt I would emigrate by any means necessary... good luck trying to collect student loans internationally. Especially after I emigrated and changed my name and formed Cayman LLC's to hold my assets... (if I was able to rebuild my life). And if I was not able to rebuild? If I were a senior citizen or someone on Disability (5% of the adult population is on Disability... over 1/3 of them for "mental illness!! ROFL!!!!!) I would relocate to Panama as a Pensionado.
Life is short. Fighting lawyers and government agents and banks and student loans.... is a fool's errand. If you are in bad financial shape why would you cause your own death from stress? If you are a highly educated or trained professional or a millionaire with modest overhead... good for you! This does not apply. If you are struggling to pay the bills and wolves are at the door ready to tear you limb from limb... there should be kettle drums playing in the background this time tomorrow.
Don't want to learn Spanish? I would disappear into the black market... but property taxes, debts, interest... would all be yesterday's business.
So what's this got to do with housing?
Housing is dead. DEAD. And its dead despite the Federal Reserve (and the U.S. Treasury) throwing everything they had at it. At some point they will stop shooting... if not, they will eventually shoot themselves. Oil is not going to let them off of the hook. It is over.
The U.S. economy is based on a fractional reserve banking ("FBR") system run as a cartel controlled by the Federal Reserve. FBR needs a functioning real estate market to work. We don't have a functioning real estate market. The vast majority of the total value of properties is on the coasts (The New York Metro region represents the biggest lie that statistics can provide. If you believe the reports there, housing is "only" down 25% there versus 35%+ for the rest of the nation. Here's the thing: New York has a huge inventory of defaulted homes that the banks are not foreclosing. When the sheer size of the problem catches on with the rest of the population, and given the size of the mortgages and the aggregate lost value of property there... along with the outrageous property taxes - KABOOM!) ... the very places where property taxes assure that real estate will NEVER come back. Not EVER.
(Think about it: Purchasing property in these regions is placing yourself on the hook for outrageous future pension liabilities. Why would any rational person do that to themselves? No doubt a very few will trade one set of local liabilities for another (be the lucky outlier that sells their home and buys another in the same neighborhood, for what ever reason). This is what appears to be happening in Metro New York. But as de-leveraging and de-financialization run their course the banking and finance industry will continue to contract and with it the incomes and jobs of that regions best paying industry. Who in their right mind would pay $1 Million for a home in Westchester County, NY with $40,000 per year in property taxes? $400k every 10 years to pay into a pension system that will most definitely default?)
The pension systems of the municipalities demand property taxes that the property owners cannot afford. Those pensions will default and those municipalities will cut deeply into services.... and Oil won't let them off the hook, either. Chindia is going to keep out-competing the West for the declining pool of exported Oil... the producing nations are going to continue to export less and less... yea, they will need food for Oil... not to worry... they will get it... and they will be on the winning end of that trade. Plenty of poor farmers around the world to trade with... it does not have to be the U.S. There is a lot more food, and a lot less Oil, and a lot fewer people in Saudi Arabia than in China or India... the Saudi's will get fed... and they will consume more and more of that Oil... until they can't.... but between here and there it won't matter a lick to you.
Does deflation win? Or do the Central Banks finally overwhelm deflation with deficit spending/printing/bond buying? I don't know. Does it really matter? It will be one or the other. And the timing? I have no exact idea... except that "timing" doesn't matter either. We are in "it" now. "It" is happening as we speak. A multi-millionaire professional probably won't even notice for another decade (or two). Most of those already broke and being chased by the wolves will not be able to advance their position relative to past expectations - and that's more than 3/4 of the population.
I have been noodling this pretty constantly since Staniford's post about stagnate Oil production for the past 5 or 6 years... Peak Oil is here. Total employment in the U.S. has not improved since 2000. But the demands on the working population to provide for the elderly, the retired government worker, the poor, the Disabled (Snicker), the military... has been growing exponentially... and Peak Oil is here... and I am repeating myself... but Peak Oil is here.
Peak Oil could not have shown up at a worse moment. Housing's disaster had little to nothing to do with Peak Oil, but the housing disaster will absolutely, positively be exacerbated (terribly) by Peak Oil. People are not stupid. When they see that people stay in their home for 4 years without paying the mortgage or property taxes... and then 5 years... and then 6.... then 10 years....
Say goodnight, Gracie.
"Good night, Gracie!"