When home prices went insane, people thought it was supposed to be that way. Bidding wars over homes, with the expectation they could flip for more.
Ahh remember the days of flipping? Well they are still around, Michigan is working that magic. When homes dove below the price of a used car, flippers started buying those bargains, fixing them up, and are actually selling these improved properties. So there is an upside to this economy, neighborhoods that were turning in shambled-shacks, are getting a serious polishing.
So with every down there has to be an up.. eventually. But do not expect the ridiculous bubble that has so recently popped. California’s market is falling to reality, or something close. Many are shocked that their home is not really “worth” a million bucks (literally) but instead more like $200k, though they may still eek out a higher price tag… why I will never really understand, with the condition that CA is in, and I know many people out there who would love to get out, but they can’t “figure out” how! (sigh).
So how did this mess all begin… one of my “favorite” subjects, the government. Once upon a time they had a ridiculous idea (one of many) and thought everyone is entitled to own a home, regardless if they can afford or pay for the home. So the gov’t strong armed banks into offering loans to those who had no money to pay the loans back. And golly, guess what happened? Those people could not pay their loans. The gov’t insisted it is fair & right for those people to have those homes, and extended every possible string and loophole. Yet if you have no job, and no money.. what does an extension offer? Eventually the banks suffered, we had the big huge bail out ordeal.. that was blamed on the banks, vs blamed on the government.. and then we enter the land of the foreclosure frenzy.
Should the bank bail outs have been extended, I do not think the gov’t should have gotten involved with the banks in the first place, forcing them to make these loans.
So what would have happened if the government, did not bloat up, and take control, and force the banks to make these bad loans?
One.. the housing market would not have ballooned, house values would have not doubled in a short time frame, (only to plummet with in a year or two).
Two.. the burst of the bubble & the foreclosure frenzy would not be happening.
Three… the current economic situation would not be a factor.. people would not have bought homes with inflated values, that are now upside down in value. The foreclosures, and bank bail outs, all lead to businesses closing up, lost jobs, and the monster grew.
Moral to the story.. bigger gov’t = bad, more gov’t control = bad.
Though I could spot the glimmer of hope in say Michigan, had the current economic issues be in play, Michigan would not have home prices less than automobile prices, they would be stable… they still may have had a revival in the more broken down areas.
Mosaic Daisy 