Why Does The Housing Market Still Suck?

[The Rabbi]

Of course there is. When the value of my home is driven lower because of the forced eviction of my neighbor, the price of my home is being forced to go lower.

That's a tautology.

No it's not.



That doesn't prevent it from going underwater, nor does it reduce my access to the capital I have in that house.



True, but most "investments" are relatively liquid and of far less important to the holder.

Why should houses be any different.

You really need an explanation of why housing is a different type of investment than shares of Budweiser or Treasury bonds?

That's called risk. Asking the gov't to eliminate risk is asking it to eliminate reward as well. Eventually you end up with a command economy. And we know how those work out.

No one is suggesting removing risk -from the homeowner, or from the banks you seem so afraid to offend.

Actually it is. Try it out: The value of my home goes lower and the price goes lower.
A home is fundamentally no different an investment than anything else. Many are actually held as investments. Liquidity is not really an issue here.
You are suggesting we remove risk from the homeowner: risk that his property will go down in value. I don't know where it is the government's jobs--or anyone else's for that matter--to guarantee a return on an asset.
As for houses selling for less than cars, that is a fallacy generally speaking. If you mean in Detroit, they are selling for less than cars because there is no demand. This is why Detroit is contemplating a program to create green spaces and bulldoze these houses. They have no value. Thus your statements about "capital goods" are wrong.

 

[Charles_Main]

Why Does The Housing Market Still Suck?

Because housing prices were artificially inflated and supported. People keep hoping the prices will go back up, and they may some. But the fact is the prices of houses today are much closer to the actual value of the house then they were before the crash.

 

[8537]

Actually it is. Try it out: The value of my home goes lower and the price goes lower.

except that's not what I said. What I described was a cycle, not a tautology.

A home is fundamentally no different an investment than anything else. Many are actually held as investments. Liquidity is not really an issue here.

1. Homes are fundamentally different.
2. of COURSE liquidity is an issue here. If homes were liquid we wouldn't be in this mess.

You are suggesting we remove risk from the homeowner: risk that his property will go down in value. I don't know where it is the government's jobs--or anyone else's for that matter--to guarantee a return on an asset.

I am suggesting that we reduce that risk for homeowners....and for lenders. Both benefit from stabilized home prices.

As for houses selling for less than cars, that is a fallacy generally speaking. If you mean in Detroit, they are selling for less than cars because there is no demand.
This is why Detroit is contemplating a program to create green spaces and bulldoze these houses. They have no value. Thus your statements about "capital goods" are wrong.

So you agree with me afterall: The market value of a home in Detroit is less than a car.

It's usually true that if a conservatarian talks long enough they'll agree with me without realizing it or admitting it.

 

[The Rabbi]

It isnt a cycle to say that a home value declines and the price declines. That is a tautology.

Government is not there to bail out homeowners, or any other investors for that matter. Most homeowners who buy on low money down programs are under water the first several years anyway. It isn't the end of the world for anyone.
That the price of homes in Detroit is very low is irrelevant to this discussion. That this is a fact does not mean I agree with you on anything, or that you are correct about anything other than the price of some homes in Detroit. There are homes in many places in the same price categories. It is irrelevant.
The liquidity of an asset is not relevant to a discussion of the government's continued intervention in the housing market.
What is relevant here is that the more the gov't steps in to "help" the worse they make the situation. Had they done nothing the market would have stabilized, albeit at lower prices. As it is the market is stagnating at higher prices and will be long before it recovers. This will ultimately hurt many homeowners.