Tighter lending standards and increased regulation will change the housing outlook for some years to come. As past marginal buyers are forced to sell their home to prevent foreclosures, so too will future marginal buyers be restricted from buying them.
This is from Bill Gross of PIMCO, they manage over $667 billion in fixed income assets. His conclusion is, the Fed will be forced to drop interest rates substantially to make homes affordable again. If they don’t, home prices will drop 20%. Either way, home prices have peaked and prices will be lower for the next three years. This from a guy who runs huge amounts of money and to whom interest rates are of crucial importance.