Housing Crash: Nothing To Get Upset About?

Posted by John Carney, May 22, 2008, 2:36pm

In our more contrarian moods we like to point out to people that a real housing crisis would involve mass homelessness rather than a surplus of homes pushing down housing values. And when we get really cranky we go all generational war about it: "Well, this just means we'll get to buy those baby boomers' houses for less."

We didn't realize we were channeling a former head of the Federal Deposit Insurance Corp. After the jump, read William Isaac from today's Wall Street Journal on why you should stop worrying and learn to love the housing crash.

When the headlines are not focused on the "banking crisis," they are fixated on the dramatic decline in home prices - more than 20% from peak levels in some major markets. At the risk of being politically incorrect, I'm not sure why we are upset about a 20%-off sale in housing.

After years of double-digit increases, housing prices in the city in which I live, Sarasota, Fla., jumped an astonishing 35% in 2005 - an unsustainable rate of increase that was pushing housing prices beyond the reach of far too many people. We really needed our housing markets to cool down quite substantially.

Millions of people - particularly the young - will benefit from a significant reduction in housing prices. While those who purchased homes in the past couple of years are unhappy if their investment is under water, the housing markets will be back for those who are able to hang on - with help from their lenders where appropriate. Congress's $300 billion "rescue" plan notwithstanding, the good news is that we have a lot of housing stock at more affordable prices for our growing population.



The Fed and the Mortgage 'Crisis' [Wall Street Journal]

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Posted in: Real Estate

Comments

1

Posted by guest, May 22, 2008 2:56PM

Hey, it's almost 3 PM!...Was there anything else of interest in today's Wall Street Journal?

2

Posted by guest, May 22, 2008 2:58PM

Hear.

Fucking.

Hear.

Cry me a river, buy-high and sell-low dimwits. Anybody who thinks that double-digit growth in ANY large market is sustainable over more than a few years deserves whatever happens to them.

I'm gonna buy me a NICE house sometime late next year or early next. If need be, I'll throw in a few points to rent a dumpster for the former owner's crap.

3

Posted by guest, May 22, 2008 3:30PM

Honestly, the only people who have a real problem are the dipshits who bought homes they couldn't afford and the dipshits who paid too much to hold the crappy paper on those homes. For them, this is a tragedy, for the rest of us, it's a comedy.

4

Posted by guest, May 22, 2008 3:48PM

yeah, the douchebags who sell and trade the paper and are now unemployed find it very funny too.

5

Posted by guest, May 22, 2008 4:24PM

@3:48pm some of those people are also setting up "distressed" or "vulture" funds (to buy the same crap, again) that are bound to bomb...

clueless

6

Posted by counterclockwise, May 22, 2008 8:24PM

I've always thought that the repricing of housing to more affordable levels was the silver lining in this particular cloud. I was out of the housing market for a long time because I was the proud lease-holder of a rent-stabilized apartment. When that idyll ended, the reality bath was pretty cold.

As a bystander, I had wondered for years where ordinary people were getting the money to pay astronomical housing prices. Now I know. I think prices will fall further, because there is no shortage of people in deep financial trouble.

Btw, Donald Trump is apparently sponsoring "seminars" around the country on how to make your fortune from buying and selling foreclosed property.

7

Posted by guest, May 22, 2008 9:20PM

The online ads I've seen for real estate seminars from Trump and that "Rich Dad" idiot are clear signs that there's another dumb money cycle starting.

8

Posted by guest, May 23, 2008 2:08AM

sarasota...holla

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