Who caused the housing bubble?

Here is one I have been throwing around in my head. The president should declare all the houses bought in a certain time period to now be half priced. The loans taken out were on over valued properties by contractors and banks and should never have been valued so high in the first place. What would this do to the markets?

RexRed wrote:

Here is one I have been throwing around in my head. The president should declare all the houses bought in a certain time period to now be half priced. The loans taken out were on over valued properties by contractors and banks and should never have been valued so high in the first place. What would this do to the markets?

Too bad you didn't keep that idea in your head.

Do you mean, the houses are now worth half of what was paid for them? If so, now you're putting people in very bad negative equity positions. Or, you meant cut the loans in half, which also means the houses are worth half as well...now you're severely undercutting the market.

Houses haven't dropped in most areas anywhere near that. And if you had any clue, you would realize that real estate values go in cycles, they've never just gone up year after year....5-10 year cycles. Once in a while, you get a huge spike, once in a while, you get a huge drop, which we're going into now.

I can't really blame anyone but the people taking the loans if they did an ARM mortage and now can't pay it. There's your typical financially irresponsible Americans. But the mortgage programs is one reason why it's dipped. And in areas like mine, investors were gobbling up multi-family houses to flip into condos for huge profits. In turn, people were pricing multis for sale according to what they would be resold as condos, not according to rental income. So now it's pretty much impossible to buy a multi-fam home with little down, that will turn a profit from rent. So multi-families are overpriced according to what's going on today, but not 2 years ago.

It'll bounce back, then higher, eventually.