There Is No Mortgage/Foreclosure Crisis - The Great Debate!

[Bill Call]

Is there a housing crisis?

Crisis: http://dictionary.reference.com/browse/crisis

In one sense there is. We are at a turning point in the housing market. Since the housing market has been the engine driving the economy over the last 10 years any change in that market will have a tremendous affect on the whole economy,

On the other hand if instead of turning point we mean a truly dramatic series of events demanding large scale government action we do not face a housing crisis. I prefer to say we have an

Opportunity: http://dictionary.reference.com/browse/opportunity

Why does it matter? Because how we view the problem determines what we do to solve the problem. Is the decline in housing prices in Southern California caused by the same economic forces that caused the collapse of housing prices in Detroit? No.

However, most of the proposed “solutionsâ€

[ryan costa]

yes, there is no housing "crisis". It is merely at exactly where it was headed for when everyone was making money buying real estate and financing real estate. Most people were too busy making money to think that far ahead.

Unfortunately a lot of the new complexity that enabled that resulted in a tangled mess of paperwork. In many cases no one knows exactly who has the right to own or sell a foreclosed property.

This is a good opportunity. Advocates of the post-industrial economy claimed we needed to focus on the "financial services" sector. Lending people money and trading up those loans into securities that everyone made a lot of money on. (making money is good: it lets you buy more stuff)

Now that this is over the dialogue can return to the re-industrial economy, protectionism, etc. It is ok. Those are traditional American Values. The real values: not the new traditional values of arguing over what is on tv and which merchandise on tv the local young people are wearing.

[Bill Call]

Here is a good analysis from John Stossel:

http://www.realclearpolitics.com/articl ... lling.html

[Bill Call]

The mortgage, real estate, housing crisis is just the bursting of a bubble. When the bubble burst things settle down to their natural level. That is a good thing for communities like Lakewood. Unless the government feels the need to keep inflating the bubble.

See this:

http://www.npr.org/templates/story/stor ... d=89803663

Lakewood will prosper in the coming years if we don't have to go to Crocker Park to see a movie, go to Avon Commons to buy sheets or go to the New Avon Lake Cleveland Clinic to see a doctor. If that happens then Lakewood becomes the outer suburb.

[ryan costa]

John Stossel does an excellent job of dismissing the current downturn as the casual downturn in a grand optimal cycle. There is no pain! The casualties will rebound!

Unfortunately it isn't so easy to do the paper work for falling real estate values as for rising real estate values. There are fewer accounting, taxation, and psychological mechanisms for coping with that stuff. It is easier to cope when real estate prices keep going up! If my memory serves me correctly, there is even some kind of tax penalty for selling a home for less than you paid for it.

If a few bubbles in spot markets were bursting it might be easier. but it appears there are a million or so empty houses scattered across the country. That is an enormous portion of the banking industry. It is not easy to cope with houses freezing down.

[Brian Pedaci]

Here's the thing about all this that makes me scratch my head: where do all those displaced people go? Were there a million unoccupied apartments that are now lived in? Could we be in the midst of the greatest rental property boom ever?

[Bill Call]

Here's the thing about all this that makes me scratch my head: where do all those displaced people go? Were there a million unoccupied apartments that are now lived in? Could we be in the midst of the greatest rental property boom ever?

In a normal environment the the bursting of the housing appreciation boom would lead to:

1. A return to historical pricing in housing values where the value of a house had a direct relationship to its rental value and income levels of the purchaser.

2. Fewer new houses being constructed which would mean lower or no population loss in exist communities.

3. A stronger rental market that would be a boon to more established communities like Lakewood.

See this on liars loans:

http://www.slate.com/id/2189576/pagenum/2/

The most interesting comment to me was that people who lied about their income pushed up the price of housing so much that people who didn't lie about their income couldn't afford to buy. The governments solution? To bail out the liars and continue to punish those who play buy the rules.