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Congress moves to extend unemployment benefits

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Joined: 08 Mar 2008
Posts: 1204

PostPosted: Tue Jul 20, 2010 10:19 pm GMT    Post subject: Congress moves to extend unemployment benefits Reply with quote

If anything can finally break the housing market's back, it would be unemployment. Unemployment benefits serve as a replacement for employment, preventing a lot of foreclosures. This historically highly extraordinary extension of unemployment benefits means that, for the purpose of housing, people will remain in their houses for a lot longer, mitigating the day of reckoning. People purchased homes using leverage without proper historical prudence and, thanks to these benefits, get to remain in homes that similar people today can't touch. One result of this extension, then, is that there continues to exist a priority inversion in housing, where those with less money often live in more expensive homes than those with more, the primary distinguishing factor being correlated with age.

I suppose I wouldn't hate it so much if those people lived in houses independent of those which I want to own. In other words, if there were enough decent houses to go around, then it wouldn't be so objectionable that those people are getting a better deal for their money.
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Joined: 14 Jul 2005
Posts: 1824
Location: Greater Boston

PostPosted: Wed Jul 21, 2010 2:18 pm GMT    Post subject: Reply with quote

I share your frustration, especially since I have to pay into unemployment but don't believe I could collect from it given that I make a nominal pittance from side projects outside my main job, which I think makes me "self employed" and therefore ineligible (perhaps I'm wrong, though).

However, the extensions seem to be limited to a little under 2 years for a given individual. If you look two years back, we are approaching the time when the so called financial crisis hit and job losses began in earnest. These 99 week extensions won't hold off the day of reckoning much longer, right?

Personally, I think that the exceptionally low mortgage rates are doing at least as much to continue propping up housing prices. I think it's creating a huge risk that most prospective buyers don't realize.

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