HENRY PAULSON, U.S. Treasury Secretary: The longer housing prices remain stagnant or fall, the greater the penalty to our future economic growth.
In recent years, housing prices have grown way out of sync with the economy at large and with workers' wages. A fall in housing prices is not bad news as it means that people after the correction won't have to struggle as hard to get into a house.
We don't need a bailout. Let banks with bad lending practices fail, and housing prices drop.
One thing I really dislike about our little politicized economic system is that it makes irrational decisions. As the housing prices were peaking in these last few years, there appears to have been a push to get low income folks into the market before they were financially ready for home ownership. There also seems to have been a push to encourage people into speculative real estate development (flip this house). It might be my imagination, but crashes are often preceded by hyped up efforts to bring unsophisticated buyers into the market.
The next big story on the Newshour was about a spike of in the price of oil caused by the increased tension between the US and Turkey (Thank you Tom Lantos). The Newshour reports that the price of heating oil is expected to surge this winter.
It seems to me that the primary reason for the surge the price of heating oil is that we have too friggin' many houses!!!! All of these massive half-filled houses cost a grundle to heat. Waste. Waste. Waste. Waste. I know of too many situation where a single person lives in a big house. It is ludicrous.
This game where we heat more house than we need contributes to global warming. It does so big time. It probably is worse than the problems with cars that are too big for the single passenger inside.
We would be better off if more people lived in our current stock of houses. We would consume less heating oil and release fewer greenhouse gasses into the cosmos.
Since our housing market is overbuilt, and since heating costs are rising and since we've gone several decades with housing costs increasing faster than wages, then I think a correction in the cost of housing prices and a slow down in this most environmentally damaging industry should be welcome.
The idea that we should bail out subprime lenders to keep housing prices artificially high is wrong headed.
BTW, I think I mentioned in an earlier post that I suspect a big reason for the fall in housing prices is that we are chasing our immigrants away. That probably has a bigger effect on prices than the subprime loans.
On a final note, I hope people spend a bit of time this Fall working on ways to decrease their heating bill. If your house is too big, then don't bother heating every room. If you plan to heat the entire house, why not throw some cash into insulation or new double paned windows so that your heating bill will be just a little less in the cold winter months to come. (Salt Lake Home Links).
With the promise of increase heating costs, now is a good time to invest in conservation.