Vitus sent the following via email to Ritholtz. It of course was not delivered - his receiving mailbox is full or broken.
I'd humbly suggest a section is missing - finance.
Nowadays, all mortgages are backed by Fannie/Freddie, ie, the government. Take that away and no one would make loans except the Moosjaw Community Bank.
This is "working" for now, but housing will never get to "normal" without a healthy private lending market, in addition to most of the things you discuss. What will it take for the private sector to re-enter the mortgage market? Obviously, the main thing is higher interest rates - a whole other discussion.
Also, large banks have not really made loans in a long time. Is there anyone there who remembers how? And, don't tell me that GS (now a comercial bank - ha!), or JPM for that matter, actually has any desire whatsoever to get into the boring 3-6-3 banking biz
Finally, there probably there needs to be some kind of MBS market re-started, with new regulation of course. Securitization itself is in fact efficient, and would/does allow spreading of risk, but it's like dynamite: Very useful if handled only by adults.