Mickey Kaus condenses more wisdom into a single paragraph than Gretchen Morgenstern (Sunday NYT Business section) has in several weeks worth of columns on the same topic:
"Are you impressed with a drop in home values of 6.6% over a year? It doesn't seem like such a big correction, given the dramatic run-up in prices over the last decade or so. ... And don't declining prices make housing more... what's the word? ... affordable? ... This evening NBC Nightly News billboarded a "housing CRISIS." (Link available here.) I thought a "housing crisis" was when people couldn't find housing, not when it got cheaper. (NBC's expert: "It's very, very difficult to find any silver lining." No it's not.)"
--Kausfiles (lots of HTML formatting not carried over from original)
(Bias alert: I am an aspiring first-time homeowner who's waited for prices to become plausible again.)
Posted by Matt Bruce at December 27, 2007 11:37 AMThe housing crisis isn't just prices falling. It also includes:
* a global credit drought that central banks have been trying and failing to solve for four months (remember "pushing on a string" from Ec10?), which
*' has royally screwed over the market for loans above the Fannie Mae threshold of $417,000, making those loans much harder to get and more expensive, including the one you'd probably need to buy a home in the Bay Area
* the subprime crash, which has caused thousands of homeowners who actually owned their homes to lose them following frankly fraudulent refinancing from people who convinced them they'd have 1% loans and absolutely should refinance
* people finding themselves in half-built developments next to concrete slabs where the builder has left town, or worse, people whose builders bolted with their deposits
* ripple effects in the construction, furniture, and banking industries, where lots of people will lose their jobs, ok it's the business cycle but it's certainly a "crisis" when it happens to farmers or auto workers
...in addition to the price adjustments everyone needed and which are good for people trying to get into the market, and the people losing housing who shouldn't have bought at all in the last two-three years. I share your lack of sympathy on both counts, and hell, I own a home.
Sometimes it's good to simplify things. But sometimes, in doing so, you're actually leaving out huge chunks of what made it important in the first place.
Posted by: M.S. at December 27, 2007 05:31 PM