Eric Janszen, a columnist with Always On, offers a less dire scenario than I do for the collapse of the housing bubble. Rather than popping like the stock market bubble, he suggests, the housing bubble will slowly deflate — over 10 to 15 years. Why will it take so long? Because “the government will step in with all manner of supports and bailouts along the way, similar to those that created the bubble in the first place.”
Janszen sees a series of stages in the deflation as home buyers engage in denial and slowly lose confidence, as marginal home buyers realize that they’d way underestimated the true cost of home ownership, as distress sales pick up and, finally, 10 years into the downturn, as “real estate [becomes] widely regarded as a terrible, ‘can’t win’ investment. McMansions will be subdivided for rental as multi-family homes.”
Read his scenario here.