Re: Is that the sound of a can being kicked down the road?
Who says a housing crash has to happen? If you look at long term averages and figure out property prices rise at 2% more than inflation (I'm just pulling that number out of my ass, so it is probably wrong, let's just assume that's the number though) then since 2000 you should have seen prices rise by inflation + 30% (ignoring compounding) Let's say you actually saw prices rise by inflation + 70%.
Does that mean you're due for a 40% fall? Maybe. Or maybe it means if inflation averages 2% and over the next decade that housing prices remain flat, and then you're back exactly where you should be on the long term average trendline!
Keep in mind, the only reason housing prices took a rapid fall in the US was because the debt supporting them went bust. Normally that would have taken a lot of banks down with it, but since the banks had mostly sold those loans off into complex financial instruments only the really poorly run banks ended up going bust. Along with those big ones left holding the bag on those complex financial instruments, like Lehman, AIG, Fanny & Freddie.
Yes those latter three were bailed out by TARP, but one of the major underreported stories of the financial crisis is that those three companies in particular generated so much profit since then that TARP has shown a significant profit for the US government! I'd love to see someone ask one of the republican candidates who spoke out against it whether he still thinks it was a bad idea in hindsight when it didn't end up costing us anything...
When banks could no longer sell off bad loans it became a lot harder to get loans and as a result housing prices dropped like a rock in areas where they had overheated (where I live they didn't rise like a meteor due to bad loans so there was no drop in prices at all) The UK housing market wasn't supported by stuff like CDOs, and while it may still be overheated (I'll take your word for it as I don't follow it) there's no reason that prices can't stay relatively steady for as long as it takes to get back on the long run average.
Whether that's better or worse for the economy in the long run is probably something Tim is a lot more qualified to write about than me (there's another article idea for him) but which you prefer may come down to whether you're the type who wants the rip the bandage off and get the pain over with, or tug and pull a bit on it here and there so there's no really bad pain but there's some moderate pain over a longer time.