Sunday, September 05, 2010

No More Housing Intervention

NYT: Some economists and analysts urge a dose of shock therapy that would shift benefits to future homeowners from current ones: Let the housing market crash.

I am in favor of this--despite being personally PO'd for being caught in a housing bubble for the second time in my 20-year career as a homeowner.
  1. Government intervention is usually undesirable. There were extraordinary circumstances in the fall of 2008, when the Bush administration started intervention, but those are past. Time to eschew economic engineering and take the medicine.
  2. Related to point #1--the best way to diminish the chance of repetition of bubble behavior is to make sure the consequences are fully felt.
  3. In the biggest of big pictures, this is probably a good thing. Excessively expensive housing cost is a heavy burden. I used to ask people, during the boom, when they were relishing their increase in paper equity, "And where do you think your children are going to be able to afford to live? Wouldn't you like them to have some possibility of living in the same town, and not having to be subject to 50-mile commutes to find something affordable?" Nobody ever had a convincing answer to that hypothetical, of course.


  1. I can't believe anyone seriously thinks propping up home values is a good idea, at this point.