house prices - always and forever upward?

That was on the cards from the minute the CDO's started coming back in on the grounds of either fraud on "liar-loans" (folks lying about their income) or non-payment within the first six months. They'll be very far from the only bankrupts before this all washes through.

Whats now becoming plain is that the credit taps are also getting shut off on higher tranches of asset backs. Seems the "Alt-A" and "Jumbo" loans are now the ones to watch.

The trouble with relying on the charity of foreigners to supply our housing markets with necessary credit is that when they get scared, they can shut off the credit, and no amount of huffing and puffing by legislators or anyone else can change that. Like ours, the US's housing markets were always hostage to Japanese and Chinese lending. If they quit lending, we have to trade in cash.

FoFP

The Dollar is down 35% against a basket of currencies in five years, so it might be argued that they're hanging by their fingernails from both sides.

FoFP

If they're bankrupt, surely they would have to cut *all* their workforce immediately, not just half. How are they going to pay the other half?

Here's something interesting, particularly the idea that bidding models must be irrational in housing:

Here's a great paper on the start of the US housing crash. The analysis of the different tranches of mortgages and likely effects of credit flow give an excellent overview of just how a credit bubble turns to bust:

Chapter 11 bankruptcy is an administrative tool that shelters a company from its creditors so that the company can reorganise itself and continue trading. It ain't bankruptcy in the UK sense.

I would say cutting all the way down to 1% then having Greenspan publicly declare his love for variable rate mortgages (which were otherwise rare in the US) was a nice bit of bate and switch.

So hang on a minute, if our notional chidless couple are taking up too much space and thus contributing to the destruction of the countryside by needlesly occupying a 5 bed house this can be solved by them knocking down a couple of walls in said house, so if their 5 bed house suddenly becomes 3 bed house ;)

Bitstring , from the wonderful person Virgils Ghost said

Nope, they just buy a 3 bed house with inadequate living space and knock it about a bit until it suits.

"GSV Three Minds in a Can" wrote

Ermm - it'll never "suit"! The inadequate living space is all downstairs, and the excess sleeping space is all upstairs. You can't "knock it about a bit" until the upstairs falls down to the downstairs, or at least it won't then "suit"!!

The *only* way that could work is with a bungalow...

Even then most bungalows are neatly divded between living/sleeping with a bathroom in the middle.