The economic conditions are perfectly normal when comparing this recovery to all other post credit crisis recoveries. These types of recoveries tend to be very anemic and take a long time to wear off the excesses created from the previous boom. Corporate balance sheets are in very good shape while consumers continue to improve theirs by paying down debt. Government, on the other hand, continues to be leveraging up.
With regards to people who bought homes during the boom years who shouldn’t have qualified, only about half of them have been returned to being renters according to Ritholtz. Therefore, we are only about half way through the correction in housing.
No doc loans are called “rent with an option to default.”
Housing prices remain (as measured by affordability) about 8 to 10% above the mean for home affordability. This metric measures median income to median household prices.
Housing will not be a significant part of economic growth for another 5-10 years. You can watch the full video from Yahoo! Daily Ticker below: