patrick.net

Shiller has actually said the exact opposite... that lower prices are bad for the economy. Don't believe me? Just ask the unemployed construction worker down the street.

The money does not do anything to the economy unless it is spent. If the housing
price is too high, eventually you will reach the point that nobody is buying.
Then the housing market is not really contributing to the growth of economy.
It is better to keep the housing price relatively consistent to the average annual
income. Or lower in this case. When our economy is healthy and growing, it
will also stimulate the housing price. I know the US government is trying so
hard to keep inflating the price of housing. But it is really hurting our economy.
Forcing the buyer to take the higher housing price by offering $8000 tax credit
was ultimate stupidity on both the US Government and the buyers.

Well, at the peak of the housing market when prices were at their highest, wasn't unemployment under 5%? It was 4.7% to be exact. And when prices fell, unemployment skyrocketed to 10%.

Just ask the unemployed construction worker down the street.
Unfortunately, he was induced to go into construction by unsustainable housing prices. To me, this is one the real crimes of the bubble -- a massive misallocation of resources with attendant secondary and tertiary effects. Thankfully, there's jobs in North Dakota.

>Shiller has actually said the exact opposite… that lower prices are bad for the economy. Don’t believe me? Just ask the unemployed construction worker down the street.

I have to agree with EBGuy. There are winners and losers here. They weren't complaining (at least the remodelers) whe they could charge double their previous rates for home remodelling.