It's perhaps just that when you can go out and buy homes and cars on credit, and iPod and iPads for Christmas, it is mighty tempting for the fickle human brain to see that as "normal". Meanwhile, your home values will return to what they were in, say, the 1970's, or even before that. It might be a better idea to see that as "normal". Then again, prospects for economic growth were much better back then. Maybe try 1950.
The human brain is lousy with diminishing returns and receding horizons. It excels at perpetual growth. Great at the impossible, bad at reality. So bad we'd rather invent our own reality than face the one we must face. Until we can't. In the end, what we'll be left with is a small group of rich people buying up real estate for pennies on the dollar. Which is of course no different from what happened in the 1930's.
Nothing new, nothing special there. What we fear will be new and special is the degree to which we will see our economies and societies crumble; there are precious few signs that it will be better, let alone different, this time. And that's why the only disagreement Stoneleigh and I have is between an 80+% and a 90% decline in home prices. Across the western world.
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