Posted on 09/06/2010 3:53:49 AM PDT by reaganaut1
The unexpectedly deep plunge in home sales this summer is likely to force the Obama administration to choose between future homeowners and current ones, a predicament officials had been eager to avoid.
Over the last 18 months, the administration has rolled out just about every program it could think of to prop up the ailing housing market, using tax credits, mortgage modification programs, low interest rates, government-backed loans and other assistance intended to keep values up and delinquent borrowers out of foreclosure. The goal was to stabilize the market until a resurgent economy created new households that demanded places to live.
As the economy again sputters and potential buyers flee — July housing sales sank 26 percent from July 2009 — there is a growing sense of exhaustion with government intervention. Some economists and analysts are now urging a dose of shock therapy that would greatly shift the benefits to future homeowners: Let the housing market crash.
When prices are lower, these experts argue, buyers will pour in, creating the elusive stability the government has spent billions upon billions trying to achieve.
“Housing needs to go back to reasonable levels,” said Anthony B. Sanders, a professor of real estate finance at George Mason University. “If we keep trying to stimulate the market, that’s the definition of insanity.”
The further the market descends, however, the more miserable one group — important both politically and economically — will be: the tens of millions of homeowners who have already seen their home values drop an average of 30 percent.
The poorer these owners feel, the less likely they will indulge in the sort of consumer spending the economy needs to recover.
(Excerpt) Read more at nytimes.com ...
Seriously?
“When prices are lower, these experts argue, buyers will pour in”
Ah, the wisdom a $200,0000 university education will buy...
what would the common folk do without “economic experts”?
Sounds American enough, the Law of Supply over Demand, equals the price. So be it...Let the Market be FREE, and the people will be free, let it be controlled, and we are controlled..Let it fall or let it rise, let Some loose and some win. Such is life.
let it fall and wipe out everyone living on credit!!
Quit playing FDR or we will be in depression for 10 years or more!
Barry’s whole goal was to devalue the one big asset of middle class folks, their home, and to “level the playing field” so that the hated middle class ceased to be property owners and sank to the client level. His hollowing out of the private economy and his government programs have already placed Section 8 recipients in housing that was meant for productive citizens and he is essentially destroying private property ownership in this country.
Except for one group, of course: the properties that still sell are in the multi-million dollar range, and the place where home values are still high is around Washington, DC.
Now their guru is the Keynsian Krugman, previously the 'walk-on-water' economist was John Kenneth Galbraith, who never got a single prediction right and eventually stopped making predictions as his were always the opposite of what transpired.
Some of his observations were correct, such as this one:
Further, Galbraith pointed out (though it was not a new insight, as he acknowledged) that large corporations’ managers developed interests of their own and, furthermore, that their powers often came to exceed those of the stockholders who actually owned the corporations.We just saw the left-wing manager of Newsweek sell that magazine to a like-minded individual for just $1.00 - clearly not in the best interests of the shareholders. He should be made to pay for this largesse out of his own pocket.
If Obama&Co. can’t be stopped in November it will take ten years to clean up their mess.
The "Real Estate Agent(scamsters) of America" will lose money so they will fight it.
This nation was not built on 'housing'. It was built on industry. The idea that the U.S. can create wealth by pushing mortgages around a desk to the next "investor" is why we are where we are now. This was the battle cry under Clinton and Bush II. "Just build it (the homes) and they will buy". That spawned the greatest bubble in human history and this govt (that spends all of its time punishing industry and the industrious) has spent trillions trying to plug the leaks in the bubble.
A big part of the problem (still) is all of the new housing construction. Those people could find great houses for sale just about anywhere, and supply and demand would then raise prices and lower vacancies. That would be without our tax dollars being wasted. Want to lower unemployment in the construction industry? Send home non-US citizens who are taking a lot of them.
On the other end...helping new homeowners. That's just plain silly. It just doesn't make sense for anyone to buy a house unless they have a stable, secure income and plan to stay put for five or more years. Otherwise, renting is the way to go. Who knows where it's going to be safe to live a few years down the road, and if that house can be sold?
DC still doesn't get it. The feds should get their butts out of our lives, stop spending, send home invaders, secure the borders, discourage outsourcing, and bring home manufacturing jobs. While they're at it "our" elected officials and their cronies should spend the weekend reading the US Constitution instead of going all over the country telling us how great they think they are. (grrrrr..........)
Once again FR was waaaaaaaaaay ahead on this. Many post here were saying this very thing YEARS ago!
Living out of the country in my second home home prices are higher here than my other home in Florida. More stable and constuction is booming. I expect the price avalanche in Florida to happen soon.
Advice to perpective buyers looking into S Florida...be very very carefull and dont believe a word a realtor tells you!
REal estate is overpriced almost everywhere. Many homes are now taxed at a rate that is higher than their appraisal value.
If the economy doesn't pick up, I could see gulf view condos in Florida dropping another 25%. There has already been a 50% drop.
New?
I think I have been saying they need to be allowed to fall for 8 years.
The unemployed will just move in to them. They are being abandoned left and right.
For instance, Buffalo has ten thousand abandoned homes. That it knows of. Between New Jersey, up the coast to New Hampshire west to Chicago, throw in California, Florida, Arizona, there are millions. In a couple of years you will get them for a promise to pay the local tax rate.
If people go back to 1950’s and before housing practices, renting out rooms, then we could drop another 20 percent of the housing stock of the occupied list.
Remember, we still have yet to see massive increases in local land taxes, massive local gov layoffs, and of course, the pension melt down.
Oh, and there aren’t many kids around to buy the base of housing stock, either. And they have to, and their kids will have to, one way or another, pay off, or be made poor by various gov shenanigans due to all the debts run off.
Did I mention that the Chinese and Brazilians are moving up the commercial jet liner building curve? ( Guess what was in our top two manufactured exports )
Yeah, housing is coming back.
Acknowledging true market-level home values would render every major bank in America insolvent. That’s the main reason for all the stimulus games - they have no option other than to try to re-inflate the housing bubble...and it isn’t happening. Some very politically influential people and entities stand on the brink of ruin, and they are threatening every government official within reach with a dire fate if they aren’t made whole. At taxpayer expense...
Unexpectedly, unexpected BUMP !
It’s going to take more than 10 years to ‘clean up’ this mess anyway ... but your point is still valid. They could extend that to 20+ years.
Luckily the invisible hand can form a fist.
Yes and the cooked books will be a read that will put fear in you for years.
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