Here's my read on the situation.
The subprime mortgage crises largely affects people who became too involved with credit or bought "more" house than they could afford, after payment amounts went up with interest rates.
The problem is estimated at costing $67 Billion in a US economy (per US News & World Report) that is now running at $1.4 trillion per year. So it is somewhat overblown by the media (what isn't?). That excludes the terrible cost of human pyschological pain for those involved.
I do feel that the consumer who signs up for an adjustable rate mortgage, that they will not be able to afford when rates rise, is also likely to buy a TS they can't afford (or use yearly) on credit. Keep in mind that the credit issued by a developer is "free money" to them as it is in addition to the credit cards and home equity lines that got them in trouble these days. It's like getting another credit card with a big credit line, something that has been cut back itself the last year or two as consumer debt expanded much quicker than the economy.
So I do think some developer sales will be lost. I further think that the attitude of "Yippee, got a new credit card, let's go on vacation" will and has been diminisghed for a year or so already, lowering the number of travellers to timeshare rentals. I think most here who rent will agree that this year is slower for rentals than last year and the past.
But the upper 5% of the population make and control the majority of the nation's money. That's why new high-end timeshares from Marriott, et al are selling like hotcakes. Those who are doing well have done great, the stock market is still way up for example.
I think those affected will be the middle class. My heart goes out for the working poor in general, but they haven't had money for vacationing to begin with, so they should not be impacted.
And the major effect will not be from those with mortgage nightmares, but from the average person who gets concerned and pulls back on spending. It's all about confidence in the economy.
People can still have money in their pockets, but if confidence wanes, the economy goes down. Perception is more important than reality sometimes, especially in economics.
That is why it is important that this plays out as quickly as possible or at least gets less media coverage. We seem to love sensational media and nightmare stories on the news, in this case, it will hurt us all if perceptions lead to fear which leads people with money to reduce spending.
What's particularly ironic is that a $67 billion dollar problem gets covered this much and no one is talking about the $400-$500 billion dollars the US will have as it's balance of trade deficit this year. That's money leaving the country that ain't ever coming back. With no change in sight. THAT is a real threat to our futures.
