At the time interest rates for loans on mortgages were really low, and a new type of loan called an Adjustible Rate Mortgage would delay its rate change from a low rate to a higher one, by around 3 years. This meant that you could afford a much bigger loan and buy a much bigger house on the wages you had NOW on the idea that you'd have a higher wage in future to afford the difference by the time it changed to the higher rate. This was a terrible idea and while a few sane people like me avoided it as the mad plague it was, tens of millions of people who failed math signed up. This was a legal scam, and the suckers caused unintended consequences to the entire housing market, something we are still living with today.
Home prices dramatically rose because loans would let you afford more. People who bought houses at $200K found they suddenly owned a property worth $600K, enough to pay off their initial loan AND buy a better house worth $400K tax free if they sold it. So they did. That money would also pay for a $1M mansion with that $400K as the down payment. Again, on an ARM loan whose interest rate would reset in 3 years to a higher rate very few people could afford in even the most optimistic projections, but Optimism was what was used to falsify wages to qualify for these loans, and the agents selling the loans got a percentage of the total value. They were making lots of money, enough to buy houses they weren't living in, just long enough for the market to rise so they could "flip them" over to the next buyer and take those profits, pay the taxes, and repeat for further increase in their personal wealth. It couldn't go on.
The ARM adjustment period began to ramp up 3 years after the start of the bubble. This was obvious, predictable, and caused the absolute collapse of the real estate values of homes when people DIDN'T get raises like they expected. In 2006-2008, in combination with $4.50/gal gasoline and power blackouts, the bubble burst. Or halfway burst. Then the President at the time claimed he'd fixed the whole thing by taxing the hell out of all of us.
He was lying, or at least mislead our population with statements which were only partially true, at best. Prices on homes are still WAY above wages. This is because the President ordered the Federal Reserve to keep interest rates down to avoid collapse of the economy. They ignored signs of inflation, a change instituted by President Clinton and kept up by W Bush, who should have reversed that decision and excoriated his predecessor over the size of the lie. He didn't, and neither did Obama. All were greedy and lazy men, and we are suffering because of this.
Homes are still too expensive, and this is because interest rates are too low, and because of that people with low wages can get long term mortgages to buy houses at inflated prices. So houses haven't reset their prices to a fair interest rate that reflects our ACTUAL inflation rate. Cheese is $4/lb for the basic cheddar or jack. Bread is $3-4/loaf. Milk is $3/gal or slightly more, depending. This is roughly three times the price they were before 2003. That's a 10-12% inflation rate, btw. Not the 2.6% the Fed is pretending at. The liars. Treasury is supporting the lie, as well. The Consumer Price Index (CPI) is being lied about using these BS numbers based on deliberate and political lies. Its not okay, and its making more poor people, which is bad for the Republican Party, who really needs to act on this. This is a major topic with Rand Paul, but hardly anyone listens to him because its pain for us and the Democrats will take more seats repeating the lies to get votes. People are dumb, and vote for liars because those words comfort them.
The housing crisis is due to these low interest rates allowing massively overpriced homes to sell. If they couldn't get the money on local wages, that means the houses will have to appeal to rich people willing to pay too much, and you don't get rich paying too much. Housing prices need to fall about 50%, possibly more.
Rather than raise wages, which increases demand for illegals who work for less than minimum wage because they can't tell authorities about kickbacks and extortion and unfair labor practices like actual citizens do, Democrats are in bed with what are basically plantation slavers in modern times, using these cheats to scam slave labor from Mexico. The wall keeps them out of the hands of these slave traders and exploiters, but Democrats are elected by people who vote 4-6 times each. This is known, even if its uncomfortable to admit. Too much corruption causes this. The Plantation owners don't want to pay higher wages for their workers to comply with the law because that also impacts their selling price and their personal profits and everyone they compete with is cheating too. Without a hammer coming down on ALL OF THEM TOGETHER, there is no hope of fixing labor rates in agriculture and maintenance jobs being done by illegals. And without fixing these jobs there's always going to be problems with wages. Raising minimum wage just encourages businesses to hire more illegals and risk arrests and ICE raids. It isn't fair to focus on $15/hr burger flippers. You SHOULD be more concerned with jobs which employ both legal and illegals together and the implications of that industry paying fair wages which then provides actual home buyers rather than renters and felons. People who work for less than minimum wage can't get ahead in our society, and their kids know it. They also watch their parents break the laws in the country they're living and and develop contempt for law and order, and resent those who benefit from the law. You end up with outlaws in our society and they vote Democrat for life. Usually several times each per election. Famously true.
We can't raise wages until we get a wall. We can't fix the housing bubble to reasonable prices until we fix interest rates and enforce labor laws in all industries. We need the wall, and we need to expel the invaders so they stop polluting industries with their illegal labor rates. Get rid of them and we have a chance. Leave them to pollute our society and we'll continue to fail. This has to end. Keep in mind that anybody saying it is happening at some specific date in the future is full of poop. It doesn't work like that. It takes actual signals and usually laws or trade issues cause it to burst. If the President or Senate passed a law forcing Banks to dump their inventory in bad debt mortgages or pay taxes on them, then the market would suddenly collapse. That refusal to report or pay taxes on bad mortgages, btw, is why its still inflated. That's probably where things will change.
