Re: "The BEST way for the government to help the housing market is get the hell out of the way and let the free market work, the housing market will eventually hit bottom, and then the real recovery would begin..."
That is EXACTLY what was argued in this opinion piece today (and exactly what I believe will happen!)
Don't look at all the diversionary fluff coming out of Washington --- nothing they are doing or talking about doing has near-enough real money behind it to affect the market much at all.
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My words:
Do nothing and let house prices continue to fall until they find a natural bottom?
Or continue trying using government actions to prop-up home prices (thereby making a house purchase more expensive for someone who wants to buy?)
According to the most recent Case-Schiller housing data that is available, from the beginning of the popping of the house prices bubble in late 2007, until early 2009, (the "end-of-the-Bubble" period), right after the new administration was sworn-in a bit over a year and a half ago, the AVERAGE HOUSE in America LOST 32% of it's value.
Probably safe to guess that at least a point or two of further decline has happened since then... so let's just call it an even one third decline in value on average.
(Of course the *national average* does not guarantee ANYTHING when it comes to any particular house, or any particular location. It is just the average. Still, it's probably safe to say that on average single family homes probably haven't produced a positive return on investment going back for at least the whole decade. The popping of the Bubble wiped-out all of the gains from earlier in the decade....)
The average home also now takes more than a year to sell now....
So... the question is: do nothing (no more federal home buyer special tax credits and such), and let prices reach their natural level? That would probably be the fastest way to turn things around: have the country 'take it's medicine', the short-term pain, and get it over with instead of dragging the process of price adjustment out longer....
And --- just my guess --- but since Congress seems to be completely dead-locked as far as "stimulus" stuff and housing price supports goes, my guess is that is *exactly* what will happen: Nothing.
No additional big federal programs to keep house prices from falling.
So... what that means is that house prices will probably find a true floor (then start slowly climbing again) in about ONE YEAR more.
The article:
nytimes.com |
