Housing Credit crunch OR Housing valuations?
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If a seismic shift occurred in taxes in some area, that would likely affect prices as well. [suppose some state abolished income taxes and told local areas to tax real estate instead but had to get voter approval -- might be net tax increase on some types of housing.]
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still, to address your point directly -- looks to me [ex-banker] that both valuations and credit quality got out of control there.
in part, it is a positive feedback loop [which engineers know would be inherently unstable] -- poor quality lending leads to more purchasing demand which causes higher prices which raises valuations which leads to increased lending of yet poorer quality (because now both ability to pay and asset valuation are questionable).
one partial solution would be to impose valuation controls based on long term curve fitting and limit both taxes and mortgages to the long run value equation. then if/when prices exceed the long run values, mortgages would be limited to the fitted values and buyers would have to make up the extra price in cash -- which would damp demand pretty quickly.
I suspect that both the subprime and alt-a loans are pretty much history. Don't think there will be any/many buyers for such mortgages, or securities based on them, and thus there'll be far fewer such loans made. [If a mortgage broker can't sell it, he'd have to carry it himself for the life of the loan -- which isn't the business he wants to be in, so he doesn't do it at less than a truly premium rate WITH proven ability to pay.]
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and yes -- there is lots more pain to come in the financial industries. and home building. and mortgage insurance. and structured finance. and housing prices.
be warned and take care
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