Inquiring minds are seeing that people are finding out that burearcrats can’t keep stealing buyers from the future. At some point, these “future buyers” become extinct:
That seems obvious, but the “buyers’ strike” has caused house prices to drop, along with an epidemic of foreclosures. What’s worse, the long depression in real estate is probably not over. S&P has forecast that home prices will drop by 7% to 10% this year. The S&P Case-Shiller Index has dropped for most of the 20 largest real estate markets over the last several months. RealtyTrac recently reported that more than 1 million homes were foreclosed upon in 2010.
Many economists argue that the housing market may take four or five years to recover. Even if that’s proven to be true, the all-time highs of 2006 may never be reached again.
The devastation in some regions will never be repaired. Parts of Oregon, Georgia and Arizona have become progressively more deserted. Since jobless rates may never recover, there is little reason to hope that the populations in these areas will ever rebound. Some homes will be torn down in these pockets of high foreclosures in the hopes that reducing supplies will boost prices. Whether that idea will work in hard-hit areas such as Flint, Mich., and Yuma, Ariz., remains to be seen.
Remember the easing of mortgage rates in 2003 because things were ‘soft’? That should have been the end of the bull market in housing. But Mr. Greenspan eased even more to push the market higher.
And when he did that, he stole buyers from the future. Until we patiently wait forl more buyers to appear, we will have a bad real estate market. We don’t control the laws of economics anymore than we ‘control’ the laws of physics. We submit to them.
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