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news
Joined: 14 Jul 2007
Posts: 0
Location: Greater Boston
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balor123
Joined: 08 Mar 2008
Posts: 1204
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 Posted: Fri Oct 22, 2010 10:07 pm GMT Post subject: |
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| Quote: | | @Wcade, The issue I see is that as more homes are foreclosed on property prices drop. This impacts all the people who own homes in the area, and can lead to a cascading effect. I would like to see this paper provide an assessment of the potential cost to the public if home prices drop compared to the cost of directly funding a "bailout". |
I've never understood this argument. Certainly the prices of homes in some neighborhoods drop when there are lots of foreclosures but that's a micro view. At the macro, consumers are still spending a lot on housing so it stands to reason that this is actually just a problem for those homeowners, not the housing market as a whole. The impact of "fixing" this problem is that many other neighborhoods which were getting those turned off customers will receive less of them so it just results in a more equal distribution of housing losses, not a reduction in them.
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@JohnLT, falling prices may be a cost to sellers, but they are a benefit to buyers. Your hypothetical loss of $15,000 in equity would also be a $15,000 gain for the corresponding buyer. Lower prices are a good thing for first time buyers, for your children, for your children's children, and so on. Higher prices only help existing owners. In other words, lower prices benefit many more people than higher prices.
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I love this comment.
I think I can summarize the Economist viewpoint of: "Money was made and someone has to pay for it. We propose that the government should." Of course, they make no mention of where the government is supposed to get the money from. It seems, though, that either way young people and their children will be left holding that hot potato. |
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admin
Site Admin
Joined: 14 Jul 2005
Posts: 1826
Location: Greater Boston
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| Posted: Fri Oct 22, 2010 10:28 pm GMT Post subject: |
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| balor123 wrote: |
I love this comment.
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Thanks, you have good taste 
- admin |
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balor123
Joined: 08 Mar 2008
Posts: 1204
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| Posted: Sat Oct 23, 2010 1:39 pm GMT Post subject: |
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As much as people reference each other, for the most part I think people just use them to vent.
On a slightly related note, I'm still waiting for Southpark to create a foreclosuregate episode. The securitization one was just great. I'm thinking they could start with those guys who keep saying "They took my job" and replace job with "house". |
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CL
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| Posted: Mon Oct 25, 2010 11:51 am GMT Post subject: |
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My 2 cents -
1. Lower price is good for first time home buyer but not for existing homeowner. Democractic society will lean its opinion and policy towards to the majority (voting) group, which for now is homeowner not first time buyer. It's just as simple as that.
2. I think it's rather silly to drag the children into the argument coz, you see, seller has children too. In fact, since there are more homeowner than first-time buyer, it stands to reason that there are more children that will be benefit from raising home price than a sea of foreclosure. Lower price may help buyers, buyers children, new family etc to get a cheap house, but it can also bankrupt a seller family and dash their kids' college dream into pieces. Just want to highlight the flipside.
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admin
Site Admin
Joined: 14 Jul 2005
Posts: 1826
Location: Greater Boston
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| Posted: Mon Oct 25, 2010 1:54 pm GMT Post subject: |
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| CL wrote: | My 2 cents -
1. Lower price is good for first time home buyer but not for existing homeowner. Democractic society will lean its opinion and policy towards to the majority (voting) group, which for now is homeowner not first time buyer. It's just as simple as that.
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I'm not disputing that. Tyranny of the majority does seem to be the norm.
| CL wrote: |
2. I think it's rather silly to drag the children into the argument coz, you see, seller has children too. In fact, since there are more homeowner than first-time buyer, it stands to reason that there are more children that will be benefit from raising home price than a sea of foreclosure. Lower price may help buyers, buyers children, new family etc to get a cheap house, but it can also bankrupt a seller family and dash their kids' college dream into pieces. Just want to highlight the flipside.
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I'd think that lower prices would do more to help sellers' children as well because they would also benefit from more affordable housing. Maybe higher prices would lead to a higher inheritance, but that lesser benefit would be diluted with multiple children, estate taxes, and the tendency to need to wait an extended period of time for the benefit. Lower prices would be directly beneficial to them if they were to buy on their own.
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balor123
Joined: 08 Mar 2008
Posts: 1204
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| Posted: Tue Oct 26, 2010 2:22 pm GMT Post subject: |
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I think admin was referring not to the direct children of homeowners but all children for all time. Either at some point we allow housing to correct and all our children get affordable high quality housing or we kick the can down the road to them and let them sort it out. What was the population of the US 50yrs ago? 100 yrs ago? You get the point. The problem gets more expensive with time but the baby boomers are among the most selfish generation in US history IMO and I think you are right - they're going to try hard to pass the problem on.
As for college dreams, I don't see how anyone is going to be able to afford college soon but even if maintaining current housing prices could solve the problem, there's not a big difference between making children taking on a huge loan for college vs one for housing.
America is bleeding jobs due to it's high cost of living and the cost of housing is I would imagine highest up on the list of factors that affect American competitiveness. Other big factors include healthcare and minimum wage laws and restricted immigration. That's what separates us from China and India and what's been killing Europe for centuries. |
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