As the recession deepens and job losses continue to occur, foreclosures will also continue to rise, not in sub-prime loans, but in the main sector of our recently unemployed citizenry who have become victims of both poor debt practices and our ill thought and badly broken economy.
This will further weaken the housing market as inventories of unsold homes rise rather than return to normal levels. In the mean time, lenders will continue to tighten qualifying standards, requiring down payments and proof of income, which they should, but this will also further exacerbate the problem.
As time goes by, our ever present enemy of purposely induced monetary inflation along with rising energy costs will drive the cost of essential goods and services skyward, leaving fewer and fewer discretionary dollars in the hands of the average consumer.
At the same time, the increasing competition of low cost foreign labor combined with a glut of domestic labor created by increasing unemployment and never ending immigration will cause real income to fall drastically in comparison to housing costs.
Yet another negative factor that is often overlooked will be that of rising taxes. As our economic nose dive causes tax collection to wane, government will unwisely attempt to increase taxes, further reducing consumer purchasing power, while at the same time subsidizing housing!
By the point that the existing unsold housing in the U.S. is absorbed (some years), the spread between declining average income and the rising costs of new development and construction will have become sufficient to halt the entry of the average person into home ownership; forever. Much as this condition already exists in the remainder of the world.
Globalization will have at this point accomplished what it was intended to do; share poverty equally.
Interestingly enough, at the lowest point in the housing debacle there will be bargains to be had that will be based on negative market forces, rather than replacement costs.
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