Thanks Brian. Yeah that's interesting, especially with Phoenix. I wouldn't have picked that as a city that was at risk of a bubble. But I guess as long as interest rates remain low, any large city will be susceptible.
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The situation that happens with Phoenix is so many people start getting priced out of the California markets and move over to Phoenix. The new builds from 2004 - 2007 were out of control and the prices were shooting throught the roof. When the market crashed people walked away from their homes and moved in with friends and family. Then there were tons of bank owned properties all vacant. The vacancy rates in Arizona were throught the roof. Now the inventory has been soaked back up and the home builders are going crazy again. Once it crashes I can imagine the same exact thing happening again. Most people have very little to no skin in the game so they just walk away.
Interesting. I never considered a ripple effect from California.
The big difference with the Aussie market is there is no such thing as a non-recourse loan. People can't just walk away like they do in the States. The lender will bankrupt you, and bankruptcy here is a lot more painful and follows you for longer. If there are mass defaults though, I suspect the government will step in and change some laws in the borrowers favour.