Dr. Housing Bubble Is Pessimistic Over Wages and the Consequences

"We have troubling economic headwinds that are being felt on the shoulders of many American families. Over a decade of stagnant wage growth is taking a toll on the psyche of many. Many large cities still have inflated home prices yet these bubbles are slowly deflating just like the rest of housing in America. The home price collapse stems from the massive bubble and mania, that could be categorized as stage one. Yet stage two will be more ominous because home prices are now falling lower to reflect the lower wages many Americans are combating. People can only afford so much based on their household income. The fact that so many people are taking lower paying jobs and filling the seats at less than quality colleges for $50,000 a year shows how desperate many Americans are even though the recession has technically been over since the summer of 2009. Let us examine three current economic trends that are likely to keep wages low and home prices just as low moving forward...."

Cut to some gripping charts, and then he concludes with,

"Early in the crisis I thought that people would be up and furious about what was going on. I’m not so sure about that anymore. If a crisis that was the worst since the Great Depression didn’t get large number of Americans out to the streets and demand substantive action then nothing will. Where is the organized movement to reform the capital markets? Where is the multi-million person organization to break up the too big to fail banks?

"This is why this leakage accompanied by falling wages seems to be the path forward. Do you think big east coast investment banks care if certain prime cities in California see a 50 percent price decline? They don’t and that is why we are seeing more homes leak onto the market. The profits made globally are now surpassing the chump change in housing so expect more lower priced homes to hit the market to reflect the lower wages Americans are earning. McJobs to accompany the McMansions."

3 economics trends stifling wages and pushing home prices lower: 1,000,000 people apply for 60,000 McDonald’s jobs, the college tuition bubble, and long-term shadow inventory.