Crime, Politics and Policy reasoned months ago that this would happen. See this October 2010 article. In fact, check out my January 2010 commentary proposing a unique solution that would prop up the residential housing market, reward responsible homeowners and support the supposedly-capital-starved banks...and all without a dime of
This should be no surprise at all. There are looming foreclosures, as thousands of homeowners engage in strategic defaults and pocket that money to deploy elsewhere. There is a large overhang of homes waiting to hit the market. And all of this is occurring as mortgage rates are below five percent on conventional, fixed-rate 30-year loans. One can imagine the effect on prices when foreign investors stop buying Treasuries and the interest rates skyrocket.
Eric Dixon is a New York lawyer, strategic analyst and litigation stress consultant. Mr. Dixon is available for further comment at 917-696-2442.