Want to Help the Recovery? Buy a House
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  • Kinda removes any rationale for a Romney candidacy, doesn’t it? If the economy is gaining, we don’t need a businessman to turn it around. If the over-reach of government is ourproblme, then we don’t need the guy who invented Romneycare running America.

    And, of course, there’s always the consistent rational for not nominating Romney: America does NOT elect moderate republicans. Never have. Never will.

  • Fred

    _ America does NOT elect moderate republicans. Never have. Never will._

    Um Alex, do the names Dwight D. Eisenhower, Richard Nixon, and George H.W. Bush mean anything to you?

  • Jim.

    A couple problems here:

    – Do we have a “glut” of homes, or are we approaching a traditional level of homes on the market? You can’t have both.

    – Low interest rates are good if you’re in largely (or even somewhat) undeveloped land. But if you’re in a city where land is scarce, low rates for you are also low rates for anyone else who wants to buy the house. Further, when rates go up again, that squeezes the buying power on the market, driving your home value down.

    If you’re buying in a city for the medium or long term, you want to buy when rates are high. This drives the overall price down at first. Then, when rates drop, two things happen: your home value goes up, as buyers have more buying power, and two, you can refinance to a lower interest rate. It’s like an ARM, in reverse.

  • Kris

    “Want to Help the Recovery? Buy a House”

    Right on it, Boss. Say, you wouldn’t happen to want to give a faithful commenter an open-ended interest-free loan, would you? Out of patriotism, of course. I’d even name the foyer after you!

  • Walter Sobchak

    I don’t think that there is any reason to believe that there will be a recovery in housing prices any time soon. Both demographics and economics are against it.

    Demographics because the wave of retiring boomers who expect to sell their houses, move to a resort condo, and bask in retirement, is building. Besides, fooled by the housing bubble of the 00 decade, they sucked all the equity out of their houses and spent it on toys and fancy vacations. They are now underwater on their mortgages.

    Further, the boomers did not raise enough children to be the suckers in this multi-generational ponzi scheme. The kids they did raise can’t find good jobs, and are lumbered with student debts that they can neither pay nor discharge. The kids must therefore, delay marriage, and child rearing, which will in turn cause them to delay buying their parents houses.

    Furthermore, we have way too many houses. Detroit and Cleveland are tearing their houses down.

    The Blue model has failed and it cannot be revived.

  • Mark in Texas

    Usually ignored in these statistics are the hundreds of thousands (millions?) of houses and condos owned by banks and kept off the market in order to keep housing prices from going even lower. And there is another enormous supply of houses that banks could forclose on but don’t because they already have too many empty, forclosed on houses that they can’t or won’t sell and even if the people living in the houses are no longer paying their mortgages, they are still keeping them heated, fixing the roof and broken windows, mowing the lawn and keeping junkies from tearing out the copper pipes and appliances which the banks would have to do if they took over.

    Housing prices still have a long way to go yet. Feel free to throw yourself on the grenade for the economy by buying a house now but things might not look so rosy for your investment after November when the election year economic finagling is over.

  • Charles R. Williams

    This is not a bad time to buy a house – if your lifestyle is best served by owning a house and if you want to buy in an area without a huge backlog of troubled properties.

    The housing market is complex and diverse. I would not buy in Las Vegas or Phoenix even if I wanted to own there.

    Housing will recover region by region and neighborhood by neighborhood. The driving forces are household formation and growth in employment. Eventually, this will resolve the problem.

  • Mark in Texas

    Household formation and improved growth in employment will help but the generation that is of age to form households already have mortgage size payments for their student loans.

    I am afraid that the only thing that is going to revive the housing industry will be enough inflation to make current housing prices a lot more affordable and student loans a lot less onerous. My current guess is that will be when a Big Mac costs $12 and a much larger fraction of the working population earns six figure salaries.

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