Posted on 01/03/2010 9:10:08 AM PST by blam
Real Estate: The Worst Is Not Over
by: Michael Panzner
January 03, 2010
One of the risks, and perhaps, the irony, of employing the wrong solution to "fix" a problem is that it can make matters much worse.
In my view, that sums up Washington's efforts to address the fallout from the crisis-cum-downturn. Aside from the fact that government actions -- especially those taken with great haste and a limited understanding of the issues involved -- often have unintended consequences, the moves have inspired a false sense of confidence in many of those who've been adversely affected. Instead of making adjustments necessary to cope with what is essentially a secular shift, many have hung on in hope, viewing the events of the past few years as a nightmare that will soon be over. In the meantime, they've used up valuable resources, stuck with inappropriate lifestyles, and failed to make contingency plans.
One area of the economy about which people seem especially prone to wishful thinking is the real estate market. Already, the dip-buyers are moving in, and those who failed to sell at the top and as the market tumbled during the last two years are holding off, expecting the next leg up to take them out at much better levels. But as Martin Hutchinson, Contributing Editor of Money Morning explains in "Don’t Be Fooled by the Housing Market’s False Bottom," they risk ending up in a deeper hole than they are already.
[snip]
U.S. loan program may have made things worse (Another failed Obama program)
Ultimately, economics has to be reduced to the real world conditions. If more houses were built than there were credit worthy buyers, it will just take time before the surplus housing comes off the market. No goverment program, no bailout, no jiggering with interest rates, or foreclosures, will supercede that.
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