No, it will mean that the average Joe that will walk away from his mortgage because he doesnt want to pay on a $190k mortgage when his neighbor just bought the same house for $100k. Then the banks need another bailout, people start losing their jobs and 40k per year that the guy was making that just bought the house suddenly goes to $0 per year because he lost his job because of what is happening and now he cant pay on his house either. Didn't we just go through this the last few years (and still going through it?) Surely you saw this happening too, right?
there are two choices. 1. Debase and debase the dollar til salaries go up... Whereby the pool of buyer's incomes goes up to match up with the still inflated prices of homes. (of course net net we destroy the rest of our economy) Another option in this category is debase for decades because wages never go up and we just wait for foreigners to buy up all the real estate. or 2. Let the markets correct now... stabilize quickly and let america rebuild with resources properly allocated in the correct places. Politicians and the Fed are unlikely to do 2.
The first scenario is offset by the global wage arbitrage. Of course, unions never got the memo and they've got all the politicians in their pockets, but that has become a net drain on the economies in the pro-Union states. The foreigners have been doing alot of the buying over the past decade. I'd argue that it's part of what drove prices skyward to begin with and what's kept a cushion under other desirable parts of the market. We have to remember how much the dollar has weakened vis a vis foreign currencies in the past decade. The third option has been happening regardless of the actions of the "fixers". It's somewhat amazing to see the price declines in some markets that are even more noticeable when you calculate the increased cost of living (sans housing). Of course, it's also important to consider the thousands of strategic defaulters who are living for free in their homes. No property taxes, no mortgage payments...and regardless of all of the rhetoric about these people being penniless, there are certainly enough of them with the means to cover these costs, but they see it as a losing bet and throwing good money after bad. I don't even think the free market option is conceivable at this point. Obviously, you work in the industry and know all about the title issues, etc...but there are so many legal issues that have yet to be sorted out that I can't foresee an expedited solution to this mess.