The market around here is still performing poorly, I don't doubt it. My neighbors have been unable to sell their house for over a year, despite having reduced the asking price several times. The worst case scenario is a crash of about 1/3.
But that still means that a $200k mortgage on an average house would leave you with about $35k in equity. But why should house prices fall by a third when the money supply is increasing at a rather robust 7% annual rate? (and we don't even know how high M3 growth is, thanks to the sudden desire of the Fed not to calculate it anymore.
)
I strongly believe that with Helicopter Ben in charge, we won't see deflation. If the economy softens, just print more money. Heck, we have a real inflation rate well above the Fed's comfort zone but are they raising interest rates?
Most of the smart money is betting on a rate CUT in the next couple of meetings, not a rate hike.
In the 1973 to 1983 period when the dollar lost roughly half of its value, people who were invested in real estate did not lose money in nominal terms. Mortgages are not adjusted upward just because the dollar loses purchasing power so people with fixed rate mortgages will survive and may even benefit from the upcoming period of high inflation.
However, people with exotic, sub prime, interest-only ARMs will suffer horribly.
People who should never have been able to afford a home will end up renting again or in a government labor camp (as some claim that FEMA will set up).
We will only start having society-collapsing problems when energy becomes physically unavailable at any price.
