I'm glad to see that some people get it. This sounds a lot like the earliest rantings of this blog:And thenComment by Vmaxer 2007-03-31 11:14:44
So many in this country preach to the rest of the world about our free market economy. If we really beleive in free market forces, then we have to allow market forces to cleanse the housing market of mispriced assets.
I would like to see talk in the MSM about debt to income being the real determinant of affordability. This point never seems to get made. If prices are allowed to correct to a point where debt to income levels are reasonable, we will see stability return to the housing market. Most discussion seems to center on how to artificially prop up already overinflated prices. Interference tends to make the problem worse and drag out the pain.
Or how about high housing prices actually being a drag on the economy. High prices mean large mortgage payments, which translates into less money available to homeowners to spend on other good and services. Lower prices for housing can actually be good long term for the economy. It frees up more of peoples earnings to be spent in the economy instead of paying interest on mortgage loans. It also make the country more competitive internationally, a lower cost of living translates into a more competive workforce. My point being, high housing prices aren’t necessarily a good thing, there are negatives also.
Comment by kerk93And I would also add, IMO, that what we need for the housing market to return to a state of being a true free-market is to also remove all those things (scroll down to the "Role of Government" section) that make it not a free-market:
2007-03-31 11:56:28
Exactly. The USA would be the USSA (United Socialist States of America). The Fed and Congress, through their monetary and tax policies respectively, have determined through central planning the production of goods. In this case, it has been housing.
- GSEs
- HUD
- Tax breaks
- Tax controls
- Mortgage assistance
- Interest rate manipulation
- "300 government programs designed to make housing affordable"
- etc
I think this housing situation and the political reaction to it is analogous to the situation of a drug addict -- the only way to avoid the pains of withdrawal is to keep taking the drug that he knows is ruining his health and quality of life; he may feel better in the short term but he would be much better off by quitting outright the drug habit. Not doing so is guaranteed to result in catastrophic failure.
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Also, the larger the mortgage payment, the less left over to fund retirement accounts. I read somewhere that no mortgage loan should be more than 15 years. If it is, you're buying too much house for your income over the long haul. People have put all their eggs in one basket. Can't wait 'til Marin is a little less smug.....
I just about spit my drink all over the keyboard when I read this little gem.
You, sir, have repeatedly argued on this forum that people shouldn't allowed to profit from real estate. If that isn't socialist, then I don't know what is.
You, sir, have repeatedly argued on this forum that people shouldn't allowed to profit from real estate. If that isn't socialist, then I don't know what is.
Um...bailing out corporations and homeowners?
Oh, right, I forgot. It's not socialism unless it helps the poor.
Grown up response to a problem:
I'm not sure how, but we'll get by someway.
Childish response to a problem:
Someone help me!
I think you grown ups out there get the picture.
Look,the gov can easily afford to bail people out,after all it has been a republican administration for YEARS,dedicated to fiscal responsibility,small government an individual rights! And they started out with a 6 trillion dollar surplus,so there has to be plenty of money for this!even if there is a catastrophic financial meltdown these fellas can do one heckuva job of fixing things,look at post katrina new orleans if you don't believe me!FAITH,baby,faith IS the answer!!!whew i'm thirsty,Kool-Aid,please,and toss ina couple extra hits.
It's true that I would not mind to see the profit incentive eliminated from residential housing. As the commentor has pointed out, I've said it before. I wouldn't cry about it one bit. Residential housing is just too important to families and, by extension, communities. But as that will never happen then to see the profit incentive reduced is the next best thing. Given how much gov interference there is in the housing market the most pragmatic solution might be more regulation and the like. But I think a better, and more palatable, solution would be to simply remove those things that encourage speculation and investment and that make the housing market less of a free market. So get rid of the tax incentives for a start.
Maybe I need to start a new, separate thread to reinvigorate this topic again.
I just about spit my drink all over the keyboard
Sorry about that.
do inflated housing values have an indirect connect to neoliberalist economic policies at the federal level? More directly, I mean to ask, do local governments need higher property values that allow these local governments to collect higher taxes while the federal government cuts back the "trickle down" of funds that municipalities have previously incurred before the Bush II adminstrational M.O. to "starve the beast." Is David Harvey out there?
BINGO!!!!!!
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