Obamunism! Sudden and Dramatic Drop in Home Prices
By Mark Noonan on Obama Depression
From Clear Capital:
<<< Clear Capital (www.clearcapital.com), is issuing this special alert on a dramatic change observed in U.S. home prices.
“Clear Capital’s latest data shows even more pronounced price declines than our most recent HDI market report released two weeks ago,” said Dr. Alex Villacorta, senior statistician, Clear Capital. “At the national level, home prices are clearly experiencing a dramatic drop from the tax credit-induced highs, effectively wiping out all of the gains obtained during the flurry of activity just preceding the tax credit expiration.”
This special Clear Capital Home Data Index (HDI) alert shows that national home prices have declined 5.9% in just two months and are now at the same level as in mid April 2010… >>>
As we all – and I really think it was “all” conservatives making this point – said back when the tax credit was enacted and then extended, all it was going to do is advance home sales a bit, provide a short boost to prices and then move in to a big drop in home prices. Here’s something a little bit new, I guess: we’re not going to say, “I don’t want to say ‘I told you so’” because, well, we really, really want to say, “I told you so”. Because we did. Because anyone who believed the tax credit would actually help the housing market was a fool.
So, there!
Now, what do we need to do? We need to essentially have our housing market go through a bankruptcy reorganization. Early on, I strongly favored a “cram down” of home mortgages to fit market value, but now that values have dropped so much (and I bet there’s at least a 20% further drop coming), it is likely too late for any such action to be effective. The reason I advocated that was as a means of keeping houses off the market and thus sustaining over all housing prices. The crash (or re-crash, if you prefer) is here and I don’t think we can stop it. So, now I’m of the opinion that we should just let things fall where they may and look to other means to clear out the vast supply of housing which is going to not only continue to drive down prices, but prevent any rebound.
As I explained over at Noonan for Nevada, my preferred solution for lowering supply is to set up mechanisms which will induce people – investors and former home owners – to enter in to long term leases of the foreclosed properties (long term is at least 2 years, but I’d really prefer it to be 5). This gets people in to a home (or keeps them in it if we simply allow the banks to lease the house back to the foreclosed home owner, if he can afford it, at all) and gets that home off the market for 2 to 5 years – supply is greatly lessened, downward pressure on prices drops and there is a chance for recovery of value (though we’ll never, in our life times, see home prices back to their 2005-07 level in real terms).
Whatever we do, it can’t be another subsidy for a failed system. You can blame whomever you wish for the mess (me? Banksters and Bureaucrats working on human greed at all levels caused the problem), but assigning blame doesn’t fix the mess. We need to think anew and act anew to get out of this – we need real change, not “please save the idiot banks” band-aids.
, |
