Bush's advisor: Housing slump to only last six more months

Only to those who view free markets as evil.

 

Neither good nor evil.
Morally neutral.
Used to create wealth and opportunity as widely as possible? Good.
Used to cement permanent oligarchy and deform the democratic polity? Bad.
But an absolutely free-market will never exist any more than pure communism -- small "c" -- ever will. The United States succeeds most obviously with a mixed economy. And, yes, Ayn Rand is still an unreadable dolt.

 

i'm looking to buy but won't even consider for another 365 days.

 

"Record foreclosures" are real . . . but the reason for them is not a bad economy.

If you take out a bigger loan than you can pay back, or if you take out an ARM loan while fixed rates are still ridiculously low . . . then you have nobody but yourself to blame.

The economy may not be perfect, but it is much better than it was at other times when there were not record foreclosures.

 

name those times.

 

Pick a year between 1970 and 1990.

Interest rates were never as low as they are now.

Unemployment was never as low as it is now.

And in some of those years, unemployment was almost double what it is now, and interest rates were triple what they are now.

Check out 1981 in particular.

 

There has been a generation's worth of people taught they had to be homeowners since 1981. A generation's worth of deterioration of rental housing stock, or its actual disappearance. In the Boston area, rents are MORE than housing payments in a small home in a reasonable suburb.
People don't just decide to take on more debt than they can chew. They are overoptimistic, sure. But they gotta live somewhere, and if all the incentives (don't forget mortgage interest tax deduction) look like they're on the buying side, that's where they will wind up,

 

Old Tony, instead of rehashing talking points memos, have you actually looked at what's happened in the housing market the last decade? The information is there, in spades. The housing runup was a fraud, a ponzi scheme. Nothing more or less.

Here's another pretty concise breakdown:
http://homeguide123.com/articles/Foreclosures_are_a_Symptom%2C_Home_Prices_are_the_Problem.html

The plans politicians have put forth thus far to 'keep Americans in their homes' range from poorly conceived to downright unethical. Worse yet, none of the plans come even remotely close to addressing the real problem: home prices.

There has never been much of a gap between incomes and home prices. When one gained, so did the other. This formula changed in 1997.



Home prices began to climb at an unprecedented pace. Within a few years, the gap between home prices and incomes had become so large that affordability was suddenly an issue for many potential homebuyers.

This should have been enough to keep prices in check, but it was not. Lenders and borrowers alike found a way to dodge the issue: mortgage fraud.

Applications were falsified, appraisals were inflated and lenders loaned reckless amounts of money to unqualified borrowers. Everyone took a financial gamble on the housing market, assuming that the bad loans could be refinanced or that the houses could be sold for profit later on. These assumptions were built on the theory that home prices would continue to climb.

Of course, it didn't work that way. Home prices are falling, leaving banks and borrowers scrambling to find a way out of their self-created financial sinkhole. Foreclosures are at levels not seen since the Great Depression and are expected to get worse in the near future.

But foreclosures aren't the problem; home prices are. People simply can't afford today's prices. The majority of the people who are in default right now have not even seen a rate increase yet. It's not their bad loan working against them, it's the fact that they bought more house than they could afford. Furthermore, they bought at a time when home prices were artificially propped up.

Freezing rates and other ploys to treat the symptom of the problem are pointless. The government is essentially laboring to keep people in a depreciating asset that was a bad investment from the get go.

 

Anyone who thinks today's housing prices represent a "buying opportunity" is a rube.

 

Maybe O_T will read this article by Fox Business in order to learn more. That noted "liberal" news network, Fox, basically surmises that the increase in unemployment and the rest of the crap boils down to the following:

 

In some markets ... it might be a good time ... if you can get the credit. In other markets, there is room for prices to fall farther. I'm still waiting for the other shoe to drop in D/FW — prices here at least have held steady, but a housing glut is developing. The builders don't know when to stop.