30 Years On, I think that “Postliberal” sums it up best
Sociologist friend passed along a shaggy dog story tells the tale of an economist and his student trying to make the shallow end of a swimming pool deeper by carrying buckets full of water from the deep end and dumping them into the shallow end.His story fails to mention spillage. shrinkage and other losses in the process.
I'm not sure I get her logic.With the exception of Detroit, all 10 cities broken out by the Case/Shiller house price index show that as of December, home prices were still at least 15% higher than they were in January 2000; their 20-city composite index was still up over 50%.yeah...but that's a 9 year span of time. Houses and real estate generally appreciate, so a house in 2009 is naturally going to cost more than a house cost in 2000.This crisis is the best thing that ever happened to first time home buyers. People who couldn't afford a home 3 years ago now have the chance of a lifetime. I don't see how that keeps rents high. If anything, it will lead to lower rents because a certain segment of the population will jump on this opportunity and vacate apartments, causing prices to decline in order to keep a building full.If formerly foreclosed upon homeowners leave their homes, they will most likely be renting, causing a demand for rental properties and a price increase...no?To everything there is a season....this is the season for first-time homebuyers. 3 years ago was the season for people retiring and downsizing their homes, making a tidy profit.
I'm not sure about correlation/causation, but my rent in MA is ridiculous! "People who couldn't afford a home 3 years ago now have the chance of a lifetime."Do you live in New England? We're trying to buy our first house and even under these ideal circumstances, it's still pretty near impossible to afford anything reasonable.
Erin...I live in Florida which has been one of the worst markets affected by the boom/bust. My mother was lucky enough to sell her home during the boom and did quite well. My brother, on the other hand, bought when the market was high and is stuck with a house that he has had to rent out at a loss after having moved out-of-state. I have military friends in the same boat unfortunately.I think the issue in New England had been brewing for a while before the actual bubble, in large part due to the lack of available land for new housing.So, you're probably right that things are still higher in the New England area as a whole.
Here in the Detroit area, I hear ads on the radio about owning a home for "less than the cost of renting."Usually, the ads contain a number to a realtor who specializes in finding foreclosures at absurdly cheap prices.No mention is made of the kind of foreclosure that usually goes for cheap, which is a house that wasn't taken care of, or was gutted by the foreclosed homeowner on the last day of occupancy.During the period when copper and steel were selling for high prices, some thieves specialized in finding vacant/foreclosed houses and stripping them of copper plumbinb and copper wire. Some of those houses are on the market, simply because the bank doesn't see any return on the investment of fixing it up.
Probably an order of magnitude more relevant than the bailout is the mortgage interest tax deduction that has been going on for decades.
Quite true, copithorne. That was an earlier attempt to do what the encouraging subprime lending did this time. That deduction is quite addictive. It distorts the market, ultimately, and has been going on for so long that we can't even really estimate how much it distorts it. It is the market, now. It was founded on the same idea: homeowners are (supposedly) happier, more stable citizens, the American Dream is to own a home, let's help more people become homeowners. Nice sentiment, but not always wise.As it distorts the tax structure as well, we have double reasons to be uncertain exactly how much damage this has caused. I suppose whatever it is, we have already absorbed it, and it's only the new subprimes added on which throw us off. But I still don't like it. As above, rewarding one is always punishing another when it's government money. However much the one you are rewarding "deserves" it, it doesn't mean the one you are taking from deserves that.This is the meaning behind much of the class-warfare rhetoric, BTW - it's an effort to show that the ones we are taking from are somehow bad people who deserve it.
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