Tags: Analysts | Housing | Market | Crash

Analysts: Time to Let the Housing Market Crash

Tuesday, 07 Sep 2010 10:36 AM

A growing numbers of economists and housing analysts are saying the government should stop trying to stimulate the housing market back to life and just let it crash, arguing that lower prices will bring buyers to an exhausted market that government intervention has failed to revive.

“Housing needs to go back to reasonable levels,” Anthony B. Sanders, a professor of real estate finance at George Mason University, told The New York Times. “If we keep trying to stimulate the market, that’s the definition of insanity.”

Further market descents will inarguably impair the spending ability of tens of millions of homeowners who have already seen the value of their houses drop an average of 30 percent, making them even less likely to engage in the consumer spending the economy needs to recover.

Moreover, homeowners who see comparable homes selling for half of what they themselves owe may well decide to simply default on their mortgage loans, increasing pressure on the Obama administration to take additional action.

“The administration made a bet that a rising economy would solve the housing problem and now they are out of chips,” said Howard Glaser, a former Clinton administration housing official with close ties to policy makers in the administration.

“They are deeply worried and don’t really know what to do.”

The Associated Press reports that those states hardest hit by foreclosures — Arizona, California, Florida and Utah — also suffered the biggest month-to-month jump in bankruptcy filings in July.

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A growing numbers of economists and housing analysts are saying the government should stop trying to stimulate the housing market back to life and just let it crash, arguing that lower prices will bring buyers to an exhausted market that government intervention has failed...
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2010-36-07
Tuesday, 07 Sep 2010 10:36 AM
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