Why Does The Housing Market Still Suck?

[The Rabbi]

Over two years into this recession and the housing market shows little sign of recovery. Why? Maybe because the gov'ts programs to "save homeowners" is only forestalling the inevitable and artificially keeping prices high. Get rid of all that, foreclose on people who can't pay, sell the foreclosures and let the market clear. Worked wonders back in 1990.
Holman Jenkins, Jr.: The Foreclosure Crisis and the Future of American Communities - WSJ.com

Millions of Americans have stopped paying their mortgages, creating a giant paperwork snafu and legal crisis, and yet . . .

Funny how many media accounts begin with that rarest of creatures, a homeowner fully paid up on his mortgage, or better yet a Florida man who paid cash for his house, and who was foreclosed on anyway thanks to a paperwork error by some confused bank. This poor shmuck then is made to symbolize the larger phenomenon when in fact the larger phenomenon is precisely the opposite.

more at the source.

 

[8537]

So the answer to collapsing home prices and record foreclosures is to....

Encourage faster collapsing prices and more foreclosures? Brilliant!

 

[blu]

the problem is that the foreclosures won't sell. too many people are unemployed to keep up with high buying volume, investors aren't buying homes like they used to, and the government broke the market for years to come with their 8k tax break on house buying which artificially jumped the market for a short time, but ensured that it would prolong any real recovery of that market. same as cash for clunkers did

 

[Toro]

Too many houses. Too much supply. Simple as that.

Supply/demand won't be back into balance for at least another two years, maybe longer.

 

[Revere]

The bailouts were targeted at future political donors, not necessarily the parties who incurred the losses.

 

[blu]

So the answer to collapsing home prices and record foreclosures is to....

Encourage faster collapsing prices and more foreclosures? Brilliant!

its a pretty sick cycle, people had to buy overvalued houses due to investors taking too much risk buying property, artificially inflating the prices, followed by banks and other company's (employers of people with mortgages) investing into this high risk situation, and once it all came tumbling down everyone got screwed b/c investors lost their money, companies had to fire people due to losses, and the people couldn't pay their mortgage because they got fired due to incompetency and greed from people at the top of the chain. all of this over houses that are now worth a 1/5 of its old value because of greed and incompetence

 

[The Rabbi]

So the answer to collapsing home prices and record foreclosures is to....

Encourage faster collapsing prices and more foreclosures? Brilliant!

That's called "clearing the market." What is your alternative? Bail out homeowners who can't pay anyway? That's been a proven failure.
No, get the process over with, let prices fall so people who actually saved money and can afford the houses can buy them.

 

[G.T.]

So the answer to collapsing home prices and record foreclosures is to....

Encourage faster collapsing prices and more foreclosures? Brilliant!

That's called "clearing the market." What is your alternative? Bail out homeowners who can't pay anyway? That's been a proven failure.
No, get the process over with, let prices fall so people who actually saved money and can afford the houses can buy them.

The prices are preeeeeeeeeeetty fuckin low, dude.

 

[The Rabbi]

So the answer to collapsing home prices and record foreclosures is to....

Encourage faster collapsing prices and more foreclosures? Brilliant!

That's called "clearing the market." What is your alternative? Bail out homeowners who can't pay anyway? That's been a proven failure.
No, get the process over with, let prices fall so people who actually saved money and can afford the houses can buy them.

The prices are preeeeeeeeeeetty fuckin low, dude.

No, "dude" they aren't. They are historically high. Get your fucking facts straight, "dude" before you sound like more of an idiot than you already do.
The Housing Chart That's Worth 1000 Words

 

[8537]

So the answer to collapsing home prices and record foreclosures is to....

Encourage faster collapsing prices and more foreclosures? Brilliant!

That's called "clearing the market."

No, that's called ruining people's lives, rendering them homeless and impairing the ability of their neighbors to sell their own home.

Markets for peanut butter "clear". markets for beer "clear". There's no market-clearing price for the housing market short of financial collapse for millions of Americans and hundreds of financial institutions.

But that's the liquidationist answer to everything. Things haven't changed much in that regard since 1931.

What is your alternative?

Steps to prevent reduce foreclosures, incent banks to refinance and keep people in their homes so they don't make their neighbors home worth less.

 

[Revere]

In other words, a brand new bubble.

 

[8537]

Too many houses. Too much supply. Simple as that.

Supply/demand won't be back into balance for at least another two years, maybe longer.

In Europe, some are seriously recommending destroying real capital (homes) in order to reduce supply and improve the lot of financial capital.

Only an economist who works in a cave could come up with such a plan with a straight face.

 

[The Rabbi]

So the answer to collapsing home prices and record foreclosures is to....

Encourage faster collapsing prices and more foreclosures? Brilliant!

That's called "clearing the market."

No, that's called ruining people's lives, rendering them homeless and impairing the ability of their neighbors to sell their own home.

Markets for peanut butter "clear". markets for beer "clear". There's no market-clearing price for the housing market short of financial collapse for millions of Americans and hundreds of financial institutions.

But that's the liquidationist answer to everything. Things haven't changed much in that regard since 1931.

What is your alternative?

Steps to prevent reduce foreclosures, incent banks to refinance and keep people in their homes so they don't make their neighbors home worth less.

No one's life is ruined by being foreclosed on. No one is rendered homeless by being foreclosed on. That is a liberal myth. Most foreclosed people end up renting for less money. Ever hear of "jingle mail"?
The gov't has already tried keeping people in their homes. The result has been no recovery in the housing market and a continuing economic stagnation.
Bush Sr did exactly what I wrote in 1990 after the S&L collapse. It worked fine and within 2 years the housing market was back on track.
This policy has been a total failure. Like everything else Dems have done.

 

[G.T.]

Federal Housing Finance Agency - House Price Index

yea, "dude," they are. And interest rates make them even lower. It's a buyer's market right now.

 

[The Rabbi]

Too many houses. Too much supply. Simple as that.

Supply/demand won't be back into balance for at least another two years, maybe longer.

In Europe, some are seriously recommending destroying real capital (homes) in order to reduce supply and improve the lot of financial capital.

Only an economist who works in a cave could come up with such a plan with a straight face.

That's actually being considered in places like AZ where you have ghost suburbs of unoccupied houses. Remind me why they are unoccupied. Remind me why destroying them is a bad idea.

 

[8537]

No one's life is ruined by being foreclosed on. No one is rendered homeless by being foreclosed on. That is a liberal myth. Most foreclosed people end up renting for less money. Ever hear of "jingle mail"?

Lol, you're right Rabbi. No one is ruined by being foreclosed upon.

In related Rightwing news, no neighbors lose home value when someone is foreclosed upon. That's why homes in Detroit are selling for less than cars!

The gov't has already tried keeping people in their homes. The result has been no recovery in the housing market and a continuing economic stagnation.
Bush Sr did exactly what I wrote in 1990 after the S&L collapse. It worked fine and within 2 years the housing market was back on track.

Are you honestly attempting to compare the S&L crisis to our current situation?

Seriously?

 

[Revere]

Too many houses. Too much supply. Simple as that.

Supply/demand won't be back into balance for at least another two years, maybe longer.

In Europe, some are seriously recommending destroying real capital (homes) in order to reduce supply and improve the lot of financial capital.

Only an economist who works in a cave could come up with such a plan with a straight face.

Your proposal to cram down mortgages is not any different.

 

[The Rabbi]

Federal Housing Finance Agency - House Price Index

yea, "dude," they are. And interest rates make them even lower. It's a buyer's market right now.

So, "dude" why aren't they selling? About 91% of the public has a job.

 

[8537]

Too many houses. Too much supply. Simple as that.

Supply/demand won't be back into balance for at least another two years, maybe longer.

In Europe, some are seriously recommending destroying real capital (homes) in order to reduce supply and improve the lot of financial capital.

Only an economist who works in a cave could come up with such a plan with a straight face.

That's actually being considered in places like AZ where you have ghost suburbs of unoccupied houses. Remind me why they are unoccupied. Remind me why destroying them is a bad idea.

If I really have to explain why destroying real capital in order to prop up financial capital is a dumb idea, hope for you is already lost.

if there are homes that were never occupied etc...one could make an argument for gutting them and selling off the inventory - but that's quite a different thing than foreclosing on people in order to destroy their homes (real capital)

 

[Revere]

In Europe, some are seriously recommending destroying real capital (homes) in order to reduce supply and improve the lot of financial capital.

Only an economist who works in a cave could come up with such a plan with a straight face.

That's actually being considered in places like AZ where you have ghost suburbs of unoccupied houses. Remind me why they are unoccupied. Remind me why destroying them is a bad idea.

If I really have to explain why destroying real capital in order to prop up financial capital is a dumb idea, hope for you is already lost.

if there are homes that were never occupied etc...one could make an argument for gutting them and selling off the inventory - but that's quite a different thing than foreclosing on people in order to destroy their homes (real capital)

As opposed to destroying lenders stake in them?