Too Much Of A Bad Thing....

An oversupply and an underdemand in housing , or what's that trickling down my leg??? Remember when all the cool kids were buying houses? Everybody was doing it. Of course there were those of us who "just said no!" Nobody listened. there was no "Very Special Episode" of House Hunters on HGTV for us. We were renters, losers, we actually put our money in Banks rather than granite counter tops. All of our houseowning friends said we were gonna get an economic wedgie and we'd better get ourselves a mortgage PDQ . House builders kept putting the houses up , and then they started super-sizing them. Some people couldn't just stop at one. If one could make money off of one house, how much more money could one make if one bought two or three or more? The lenders made it easy. Of course they did. Enablers.Go out on any street corner, the first vial is always free. But now the tipping point has come

NEW YORK (CNNMoney.com) -- Subprime lenders are already getting crushed, but the impact rising mortgage delinquencies will have on home prices overall is still an open question.

At a minimum, it means financing is drying up for those with less-than-perfect credit and that spells fewer home buyers.

And foreclosed properties will add supply to a housing market that already has too much.

"It's going to be a really big deal," says Dean Baker, co-director of the Center for Economic and Policy Research.

The PTB have finally roused themselves and smelled the Sanka. They're calling it Scarey Math and you can bet that it's a class that all those RE folks and Eager Flippers out there would like to cut.

Mark Zandi, chief economist for Moody's Economy.com, is also concerned. "I think the subprime problems will take housing activity to a whole other level," he says.

Zandi is projecting a doubling of subprime defaults this year to 800,000. "Those homes will go on the market at a discount and will weigh on the market," he says. He also believes that 500,000 fewer Americans will be able to obtain financing because of the tighter standards.

Ok, so nobody can afford to buy a house and nobody can qualify under the new stringent loan standards , so where is everybody supposed to go??? Rentals! Ergo, higher demand and higher rents. At least that's what the nice man down at the RE office has been telling me. They're not making anymore land so better get onboard before it's too late. Well, they may not have been making anymore land but they have been building a whole s---load of Condos, and Flipper Palaces .

Check out the Market Oracle for a peek at where the rental market's going. Just a tasty taste. Just for you:

the bulls argue that traditional apartment construction has been weak. And to a certain extent, they're right — companies haven't been building all that many 200-unit or 300-unit rental complexes.

But here's the problem with that argument: Too many homes, townhomes, and condominiums WERE built — and sold to buyers as investments. In other words, they were sold to people who were going to turn around and rent them out anyway!


And even more homes were bought as “flips” — houses that would be quickly fixed up and resold. Heck, some buyers never even thought they'd have to go through the fix-up stage … they figured they'd be able to sell for higher prices with no additional work whatsoever.

Unfortunately, the housing market plunge has turned many of these flippers into unintentional landlords. They can't sell, and they can't afford to pay mortgages, insurance, and taxes while their houses sit there empty, either. So they're trying to rent their properties to staunch the cash flow bleeding.

In other words, while the construction of traditional apartment complexes may have lagged during the boom, plenty of town homes, condos, and single-family homes were churned out along the way. The result: Hundreds of thousands of those units are now sitting empty!

The U.S. Census Bureau says 2.7% of the country's homes were vacant in the fourth quarter of 2006 — the highest percentage in U.S. history!

For those who do not chose to buy. Yet. Or ever. It appears that there will be no shortage of housing options available. Why settle for an apartment when one can have a lovely view condo, or townhome, or a flipper palace. After all most of the people trying to find tenants for these places in a "loose market" as they call it, were actually only tenants themselves who couldn't make the rent.