Comments 1 - 7 of 136 Next » Last » Search these comments
The way to fix the problem IMHO is to reverse the massive transfer of wealth from the general population of this country to the rich.
My general impression is that if the banks totally unloaded all houses and put them on the market that the values would drop. Hence why they do not want to do that! I think this drop could actually make them drop to the point where people might not really need banks for outside of checking accounts (savings yields no interest rate)
BUT...
This is more of a game theory aspect with quite a number of players.If just one bank decides it has to recapitalize and starts to sell off its inventory the price drop might be enough to force other banks to do the same as their values would start to drop as well (think scorched earth policy).
If the government wants banks to lend and they cannot raise fees, have already cut jobs (no one wants to cut their own salary), closed locations then doing this might be the only option left.
I agree with patrick. Besides a big sharp plunge would be better than this yearly decline that seems to never end.
"House prices are falling because millions of homeowners are defaulting on their mortgages, and the sale of their foreclosed properties is driving down the prices of all homes."
Maybe half right..they are going down because we made millions of extra homes.
The last time millions of extra product were created in excess that I can think of was during the 1980's
http://en.wikipedia.org/wiki/Atari_video_game_burial
Patrick
@
2011 Oct 13, 1:10pm
The way to fix the problem IMHO is to reverse the massive transfer of wealth from the general population of this country to the rich.
We agree. Mortgage debt is a primary mechanism to do that massive transfer from the general population to the rich. But making the rest of us liable for that debt to the rich is even worse than the usual transfer. At least mortgages are voluntary. Taxes to bail out the rich are not.
My general impression is that if the banks totally unloaded all houses and put them on the market that the values would drop. Hence why they do not want to do that! I think this drop could actually make them drop to the point where people might not really need banks for outside of checking accounts
Sounds lovely to me!
bubblesitter
@
2011 Oct 13, 1:15pm
....the wealth of American homeowners has fallen by some $9 trillion. Well,considering phantom money as a wealth was NOT a good idea after all.
Patrick
@
2011 Oct 13, 1:24pm
considering phantom money as a wealth was NOT a good idea after all.
Yes, it was all counted as money, but it wasn't money.
If I declare there are a billion shares of Patrick.net and then I sell one share for $1, does that make me a billionaire?
Amazingly, Martin Feldstein of Harvard would say yes.
We agree. Mortgage debt is a primary mechanism to do that massive transfer from the general population to the rich.
The amount of debt was fixed to purchase price by the buyer who overbid stupidly based on all the wrong reasons. The buyers were wrong in believing in the long term home prices can outstip both incomes and inflation. Its crazy, but you still have people believing that home prices at or near peak was viable when it wasnt.
The real issue is home PRICES. This nation since mid-late 90s has gone bubble crazy and its still true today regardless of all the real income drivers. Stick a "Green" patch on something and somehow its HOLY Sh*t. Only the sober one see its still Sh*t at the end of the day.
....the wealth of American homeowners has fallen by some $9 trillion. Well,considering phantom money as a wealth was NOT a good idea after all.
Cant lose what you never had to begin with...
Comments 1 - 7 of 136 Next » Last » Search these comments
(Let go of the damn rope for Chrissakes!)
Several people sent me this today: How to Stop the Drop in Home Values
As if truly affordable housing were a bad thing! Sure, if you're a stupid bank that blew all its capital on stupid lending, and lower prices expose your stupidness, then that can't feel good, because you are after all the "experts" in lending. Though all that sweet taxpayer cash sure does sooth those wounds!
And if you're a stupid (yes, that's the right word) borrower who stupidly borrowed money to buy prestige and self-esteem at stupidly high prices, well, who exactly forced you to borrow that money? And does your life end if you have to go rent something you can actually afford, like the rest of us? Maybe you'd actually be happier without that albatross around your neck.
Martin Feldstein, the author of that article, says
What he does not say is that at a sufficiently low price, all those residential neighborhoods will quickly be filled will happy and reponsible people who don't need to borrow money to buy at that price. Patrick.net reader StoutFiles rightly says:
The key is to accelerate the drop in house prices by refusing to support stupid mortgage debt with taxpayer money. When houses become truly affordable, they will be bought with savings rather than debt. Demanding that anyone except the stupid banks and stupid borrowers pay for their own mistakes just drags down the whole economy.
If there were no mortgage debt, there would be no negative equity or foreclosures.
If there were no mortgage debt, the banks never would have had a mortgage debt crisis.
If there were no mortgage debt to compete against, your savings could buy a nice house.
Please write Obama and your Congressmen and ask for a complete end to mortgage debt subsidies, so we can accelerate the drop in housing prices.
#housing