Friday, September 23, 2005

Has the Housing Bubble Been Good to Us?

The New York Times questions whether the housing bubble has really been all that good even for those who bought before the explosion in prices:

"Now that home prices in some markets are showing signs of moderating, lamentations are rising from all sides about the many bad things that may happen as a result. . . .

Unfortunately, all of this hand-wringing tends to distract from the essential truth about soaring home prices, which is that they are a bad thing. . . .

What's so bad about skyrocketing home prices? Almost everything. First, they make life awfully difficult for people who aren't already homeowners and do little for people who are, because selling one inflated house only to buy another affords little profit.

It's true that mounting home equity makes for a nice piggy bank, but it probably also suppresses other kinds of saving and encourages excessive debt. . . .

Sky-high home prices also divert too much capital into home building from potentially more productive uses. And these prices fuel risky, not especially useful speculation in residential real estate. . . .

Finally, wouldn't it be better for society, and safer for our financial system, if people could buy a home without resorting to the kinds of loans - with deferred amortization, for example, or scant down payments - that are risky for borrowers and lenders alike? . . .

My sense, though, is that home prices appear determined to fall, at least where they are most inflated. And having them fall sooner imposes lower costs than having them fall later, while delivering immediate benefits."

Link:
Pop Goes The Bubble

2 Comments:

Blogger Data Entry Professionals said...

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10:40 AM  
Blogger Dave Velasco said...

Wit the current market condition that we have today, all I can see is that home prices are continuously falling and many of us are now being pessimistic. I think what we should do now is to become more optimistic rather and look for possible solutions and creative ways to put back our market state.

New York Real Estate CE

1:09 AM  

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