Grim Housing Choice: Help Todays Owners or Future Ones nytimes On Sunday September 5, 2010, 5:58 pm EDT 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 Grim Housing Choice: Help Todays Owners or Future Ones 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, thats 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. If they see an identical house down the street going for half what they owe, the temptation to default might be irresistible. That could make the markets current malaise seem minor. Caught in the middle is an administration that gambled on a recovery that is not happening. The administration made a bet that a rising economy would solve the housing problem and now they are out of chips, said Howard Glaser, a former Clinton administration housing official with close ties to policy makers in the administration. They are deeply worried and dont really know what to do. That was clear last week, when the secretary of housing and urban development, Shaun Donovan, appeared to side with current homeowners, telling CNN that the administration would go everywhere we can to make sure the slumping market recovers. Grim Housing Choice: Help Today?s Owners or Future Ones - Yahoo! Finance The easiest way to solve this problem is to let the Dollar inflate ten percent. Then there won't be a collapsing housing market because everybody will be buying as a hedge against inflation. Pray for inflation. Pray earnestly!