I Posted This at Business Insider
I posted this at Business Insider in response to Henry Blodget's trip to Davos. If you click on the link you will notice negative thumbs down to my post. I personally believe those interested in Davos are interested in another housing bubble and lending toxic loans. I personally think the housing market is broken for good. Here is what I posted to BI:
Lol, Henry, don't let the goodies corrupt you. :) I would like to know what the Davos folks think of my theory. It is that without lots of 20 percent fixed mortgages, house prices must be volatile going forward. When the 20 percent mortgage was king, back in the last century, house prices were stable. Now, they cannot be stable until either, wages drastically increase, or house prices drastically fall.
All that is happening now is that people are buying or mostly renting as multigenerational households. That is reducing demand and only the cash boys of the hedge funds are keeping the house of cards afloat, pun intended. I say that risk has gone through the roof for people aspiring to buy a house going forward as long a this manipulation of prices upwards continues.
The only way to sustain it is with no money down. That happened in Canada and now the markets are tanking as they backed off back to 5 percent down. Easy money and cash buying together are a recipe for house price disaster! What does Davos think, Henry?