People around the country (and around the world) made some serious financial mistakes the past couple of years. Leverage is wonderful on the way up, but when prices fall soon after "buying", even a small decline can wipe you out with highly-leveraged real estate.
After a lifetime of working and saving, the simple mistake of buying a house at the peak (or even today) is enough to ruin everything. The risk was massive, the reward was questionable, and the warning signs were everywhere, yet the sheeple went ahead and did what they did, and now they're paying the price (or screaming for bailouts).
Millions of people around the world will be losing their houses during this downfall. Foreclosures will skyrocket. Inventory will build. Prices will crash. And it was all so predictable. Classic mania, classic crash. And classic opportunists, idiots and conmen herding the sheeple into the worst financial mistake of their lives.
Those who only bought within the last couple of years, however, face a different story. Since their homes may be worth less than what they paid, they can't sell for enough to pay off their mortgage and could face skyrocketing monthly payments when their loans reset to higher interest rates.
"The people who are in the most trouble are those who bought most recently, because they bought when it was going up and then it went right down," said Hans Johnson, associate director of the Public Policy Institute of California in San Francisco.