After reading this article by By CYRIL MOULLE-BERTEAUX of the wall street journal, I am convinced we are only starting to find out how volatile the housing market truly is. I was talking to my golf partner and fellow commercial real estate agent, and he put it like this, "You have'nt seen anything yet, Its a slow motion trainwreck happening as we speak." With that being said, click here for the Wall Street Journal article.
The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much.
Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.