The figure below is exactly what I have been saying all along. Even those who are foreclosed upon will be living in houses. We are not building enough to meet demand. Not for the tens of millions we will be adding in the coming decades. When it turns, it will turn hard.
a. Rent will be more expensive than owning;
b. People will start opting for purchasing with pent-up demand.
c. Credit standards will loosen because mortgages will again be a great investment.
d. We will have to spend billions just to fix up the damage to vacant properties.
Read on: A working paper by Federal Reserve economists indicates that foreclosure does not force people to live in less desirable neighborhoods, lower-quality homes or more crowded conditions. Raven Molloy and Hui Shan conclude that “foreclosure does not impose an economic burden large enough to severely reduce housing consumption.” About 75 percent of borrowers who endured a foreclosure between 2006 and 2008 continued to live in single-family dwellings, with about 22 percent moving to multifamily housing. Source: American Banker
If only the government does not make it tougher by waiting until the last second (or worse) regarding extending the debt limits.