Wednesday, March 17, 2010

The Problem with the Housing Market

Here's a great article that my friend Larry sent to me from Phoenix on the state of today's housing market. It addresses the one place that the government and lenders haven't gone, but really need to go. This is in principle reduction. This is the one true way to stop the bleeding. If they can correct all the underwater loans, then people wouldn't have incentive to walk away, would be able to sell instead of foreclose, and the valuation of properties would stabilize. The stabilization of the housing market would be stimulus for buyers to get back in. Unfortunately, our government is so focused on supply-side economics that they haven't addressed the heart of the problem, which is the decline in property values. Finally, we're starting to get more press on these aspects of the housing market. Maybe that will translate into more action?

Take a look:

More owners opt to walk and leave mortgages behind