Can't Afford Them

One of the mysteries to me during the expansion of the housing bubble was just how so many people could afford expensive houses. At the time I had no idea that lending standards had been basically tossed out the window, so I assumed that all of these home buyers had decent credit and 10 percent down. That wasn't the case. Simply put, a lot of people bought homes they couldn't afford over the long run. Irvine Renter:

So where does that leave Irvine's housing market? Without Alt-A, people will not be able to get the loans necessary to support today's still-inflated prices. Buyers will actually need to qualify for loans based on their real income, and they don't make that much money. And since many previously Alt-A borrowers have defaulted and are now Subprime, and since Subprime is currently defunct, the buyer pool in Irvine has gotten much, much smaller.

Once it became clear that the housing bubble had been largely fueled by giving loans to people who couldn't afford them, it was obvious that home prices in many areas and price ranges were going to fall. A lot. Not enough people make nearly enough money to afford them.