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Sunday, September 05, 2010

Streitfeld: Grim Housing Choice

by Calculated Risk on 9/05/2010 07:18:00 PM

From David Streitfeld at the NY Times: Grim Housing Choice: Help Today’s Owners or Future Ones (ht Paul)

Over the last 18 months, the administration has rolled out just about every program it could think of to prop up the ailing housing market ... The goal was to stabilize the market until a resurgent economy created new households that demanded places to live.

As the economy again sputters and potential buyers flee... Some economists and analysts are now urging a dose of shock therapy that would greatly shift the benefits to future homeowners: Let the housing market crash.
I wouldn't quite phrase it as "let the housing market crash" - instead I'd argue to stop trying to support house prices and think jobs, jobs, jobs. More jobs mean more households - and more households will absorb the excess supply of housing.

More from Streitfeld:
A small decline in home prices might not make too much of a difference to a slack economy. But an unchecked drop of 10 percent or more might prove entirely discouraging to the millions of owners who are just hanging on, especially those who bought in the last few years under the impression that a turnaround had already begun.
I think prices are near the bottom in many areas - although I think prices are still too high in many mid-to-high priced bubble areas. This probably means further price declines on the repeat sales indices of 5% to 10% (Case-Shiller and CoreLogic).

But I also think many of the recent FHA buyers will be underwater for a few years and they will have difficulty selling - unless they bring cash to escrow.

  • The Summary for the week ending Sept 4th (a busy week with plenty of graphs!)

  • Schedule for Week of September 5th