Quote:
Originally Posted by Snake Doctor
The Fed is talking about buying up Ginnie Mae's to drive rates down to that level....I don't think it'll help the overall problem in housing though....which is excess supply.
That's just going to take a long time to work through.
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The problem is not excess supply. The problem is that so many factors other than supply and demand have impacted home prices in recent years.
There was a bubble economy when everyone thought you couldn't lose in real estate. The bubble burst, because bubbles always burst. Only, for some reason, because it is homes, the government is all up in it. So nobody is lowering the prices on houses because they are all waiting for a bailout.
There are two houses on my
block, which have been for sale for around $1.2 and $1.5 million for over a year. If I were charging $120 a month for a web site membership and nobody bought it for a year, I would lower the price. That is what the market would dictate. Only the market is not being permitted to operate normally, so these two houses remain the same price and unsold.