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]