Posted by
Andrews on Tuesday, March 10, 2009 1:24:15 PM
Finally, I have run into someone who noticed what I did a long, long time ago. That the housing "crisis", while unfortunate for those selling, is also beneficial in bringing housing prices back in line with other prices, putting homes within the reach of responsible people who do not borrow more than they can afford to pay.
As I wrote in "
Two Perspectives", back in March of 2008:
Take, for example, the drop in real estate prices. To the media this
has been a horrible thing, robbing homeowners of their equity, harming
those trapped in ARMs, forcing banks to close home equity lines. On the
other hand, let us look at it from the perspective of someone who has
not yet bought a home. In my area, it appears prices rose 60% to 80% in
the past 8 years, while wages rose nowhere near that much. The fact
that prices have now dropped around 10% from their peak last year
likely means that a new home is now within reach of more buyers. So,
while it is a bad thing for the sellers, the drop in prices is a
benefit for the prospective buyer. (Of course, for those selling one
home to buy another, it may be a wash, unless the two housing markets
differ greatly.)
And finally I found another writer who is pointing out the same thing. In his most recent article,
Thomas Sowell wrote:
Will millions of homes just sit empty? Or will new people move into
those homes, now selling for lower prices-- prices perhaps more within
the means of the new occupants?
Of course most of his focus was on other matters, not directly related tot he cost of housing. Still it is nice to find that someone else has noticed that many of our "crises" are only crises when viewed from a single, specific perspective, and, when viewed in another light, can be seen as neutral or positively beneficial.