When I lived in Miami FL 4 years ago I could not believe the high prices of houses there at the time. It seemed like the whole market was ballooned, somewhat out of control. The price for houses in California were outrageously expensive. I live in New Mexico right now. Which is in the US just in case you did not know that, I did not know that before I moved here, well anyways. When I got here you could still buy a house at a decent and reasonable price. My house in NM would cost 5x-10x more in California. The housing boom was in full swing.

All that has changed now. It is still in full swing but it is swinging the other way now. The prices of houses now are plummeting and now most people can’t seem to sell their houses for what they bought them for. You find people who are upside down on their houses which has never happened before. They owe more than it’s worth. Buying a house used to be a solid investment. It still be in the future but not right now. Home builders are even slowing down. Most people are 1 mortgage payment away from losing their house and going into bankruptcy.

How did this happen? Well the ballooning housing prices had to eventually adjust themselves and that is what is happening now. The bubble had to finally burst like the dot com boom. Another aspect were these home loans that were being given to people. You know these adjustable rate mortgages (ARM), 80-20 loans, interest only loans. They all went bad at the same time. The banks did themselves in along with the American people. So you have a double shot, bad bank loans and the price bubble bursting.

I guess the consumer is somewhat at fault also falling for those loans. The banks were greedy and people wanted low mortgage payments. So we all got what we wanted at the time, now look. We did not want what is happening now. That is not the only thing that is happening.