What free-market triumphalists don't like to talk about is that since markets are based on little more than speculation, they're subject to "boom and bust" cycles, and someone gets left holding the bag when it busts. We've been lucky so far in this country since the Great Depression of the 1930's. Sure, the late 1970's and early 1980's were tight times, with double-digit inflation and at times nearly double-digit unemployment, but you can't really compete with the 1930's, when unemployment ran around 20% for the decade.
Since then, the "free market" has been reined in a bit, with more regulation to stop the most egregious swindling and built-in checks to stop big slides in the market. Now the big question is housing. As the BBC puts it:
Figures have shown that late mortgage payments and home repossessions in the US are at their highest level since records began.Not a good sign. I often wonder as I wander around the neighborhood who it is who's affording all these homes that sell for $700K and up and all the condos that sell for $500K and up. I know there are people out there making more than $150K a year, but not every homebuyer is doing that, and certainly with the inventive loans that had been dished out until recently (interest only, etc.), it's clear not everyone could afford the homes they were buying.
What will a longterm downturn mean in "transitional" areas like Columbia Heights? Or the north and east areas of Adams-Morgan?