So places like Texas , Tennessee, Florida, South Carolina, North Carolina, Georgia, etc. are hot for growth.The rust belt states the outlying areas that are dying have declining populations, high unemployment, more people daily jumping onto government assistance programs.

Right now houses are cheap, money is cheap, and there are tons of assistance programs so we are likely to not see any major increase in home purchases as primary residences in the near term, and in fact if the market becomes tighter in terms of inventory, lending restrictions become tighter, or interest rates rise then most people would expect a decline in the number of home purchases as a primary residence. 

The first deal would be a declining income, although the interest would make it pay off a great deal more than my investment (at min years of 8% interest- or make it 5) my second investment would make some cash available to be rolled into another investment.

2007/8 may have been the big blow, but population had been shrinking in Detroit every decade for 50 years....and decline was still accelerating in the 90s and early 2000s.

Prepayment Penalty: The simplest form of a prepayment is a straight declining fee (ie a 5/4/3/2/1 % penalty) .

Yea I don't think the credit score would have been the reason they declined you.

Why would declining short sales mean flipping is dead?  

In the first scenario, property values decline and your property becomes worth $650,000. 

Thank you.Do I need to add a reason why their application was declined?

(I declined, but you get the idea - I made myself valuable enough that I became attractive to the point where I was seen as an asset.)