Yes, and others have been writing about it as well. But we don’t generally see it discussed in detail on the nightly “news” so no one thinks there’s a problem. A major part of the overall problem nationwide is the absurdly low credit. It used to be that people paid almost three times the original price of their homes if they didn’t pay off a conventional 30 year mortgage early, given mortgage interest rates around perhaps 7-8%. That used to be the “rule.” But with interest rates where they are today, people will pay less than twice the selling price even if they go the full 30 years on a mortgage. That induces people to buy as big a house as they can, which heated up the market big time (particularly new homes – everybody wanted a “new” home). And the problem isn’t just single family housing, it’s rental properties, and commercial properties. The bubble is huge. Once the slowdown really starts to bubble up through the nice pretty wallpaper applied over it, and the cracks can’t be hidden any longer, that bubble will burst just like the dotcoms did.
A related factor that I don’t see much discussed is that with the upturn in foreclosures over the past few years (which has pulled housing prices way down in some areas), they’ve been scooped up by investors as rental property. Rentals are very hard to come by in many areas. We’re becoming a nation of renters (again), and it’s about to get much worse. What happens when rental property owners can’t charge enough rent to cover their inflated prices (they got the properties cheap, but had to put a lot into fixing them up, so they can’t discount the rents too much)? So what happens as more people lose jobs, can’t make house payments, and have to fall back into the rental market that was purchased at high bubble prices?
There are so many different facets to this problem that it truly is a gigantic house of cards, with each card representing a different part of the economy or social fabric. It will look something like the classic demonstration of how a chain reaction works, where mouse traps are set on a ping pong table, with walls up along all four sides of the table, and one ping pong ball carefully placed on each set trap. Then one more ball is tossed into the center of the table, which sets off one trap thereby launching its ball. Two are in the air, triggering two more traps, then four balls, then eight, 16, 32, 64, 128, 256, etc., within just a couple of seconds. If you’ve never seen a video of that demonstration, it’s worth looking at, just to get an idea of how fast things can deteriorate (as Selco has so clearly taught from his first-hand experience). Suddenly NOTHING works, whether utilities, public services, law enforcement, or indeed anything within the usual social order of things.