Daily Archives: September 5, 2010

Time to let housing crash?

That’s been my argument for two years. Now, according to the NYT, Obama’s considering it (but surely not until after November).

As the economy again sputters and potential buyers flee — July housing sales sank 26 percent from July 2009 — there is a growing sense of exhaustion with government intervention. Some economists and analysts are now urging a dose of shock therapy that would greatly shift the benefits to future homeowners: Let the housing market crash.

When prices are lower, these experts argue, buyers will pour in, creating the elusive stability the government has spent billions upon billions trying to achieve.

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

The further the market descends, however, the more miserable one group — important both politically and economically — will be: the tens of millions of homeowners who have already seen their home values drop an average of 30 percent.


Caught in the middle is an administration that gambled on a recovery that is not happening.

“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.”


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Why drop my price just because no one wants it? Washington Post details the lunacy of sellers, and their agents.

And while Donnelly has trimmed his expectations, shaving $50,000 off the $1 million price he’d originally wanted, the reduction so far hasn’t been enough to win over buyers.

So the weekends keep passing. Nearly three months. Zero offers.

Hart, the real estate agent, insisted that Donnelly’s house is properly priced. She said five other comparable homes within short walking distance are for sale at similar prices – $900,000 to $974,000. She said others have sold within that range recently.

Donnelly has his doubts.

Mr. Donnelly needs to fire his agent.


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Is this my future? More on CFLs.

Real estate agent switches to selling lamps.


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