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October 01, 2007
A Half-Glass Full Look at the Housing Bubble
As a former homeowner and current renter, I can look at turmoil in the housing markets from various perspectives. I know what it feels like to thrill at rising valuations, to see that pile of wood and masonry as financial security. Falling home prices cause panic and despair.
As a renter who may, someday, consider buying something again, falling prices are good. That opens more possibilities for purchases, reduces mortgage payments, and enables people with lower incomes to become homeowners. That's all good -- isn't it?
Not from the current writing on the subject. Articles focus on the buyers hurt (self-hurt?) in the sub-prime markets, with an occasional look at buying foreclosures. Some observers look at the problems of home builders. I see little awareness of the economic benefits of declining prices.
To me, that's shoddy analysis of economic forces. The comparison that comes to mind is with gasoline prices. Let gas go up a nickel and there's revolution in the streets. Let prices decline and -- nobody's expressing anxiety about that.
Rising and falling prices always have two viewpoints, but the narrative typically looks at one side. When will we see a headline, "Young Families Encouraged by Moderating Home Prices, See Opportunity to Carefully Invest Within Their Means."
That sounds like a fantasy.
Van | 10/01/07 at 06:59 AM | Categories: Domestic Politics
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Comments
Good comments. By observation, it appears that two factors have significant influence on the narrative that gets reported.
- How can the news be portrayed as a problem or undesirable situation?
- Which political figures or positions can be benefitted or harmed by the report?
Remember, in the dominant postmodern philosophy, there is not truth as such. Instead, there is a 'narrative' which is used by some group or another to gain 'power' over others. What matters then is not the truth of the report, but the truthiness of the report in corresponding to the desired narrative which gains power for the reporter's 'group'.
The two influences mentioned above support the narrative of "brave reporters helping the 'poor' or the 'oppressed' by taking on the 'establishment'".
colorless.blue.ideas | October 1, 2007 09:40 AM
Didn't Greenspan comment the other day that the fate of the world economy depended on U.S. housing prices? I think UBS wrote off $3 billion in investments last week because of their subprime stumble. So I guess it's the consequences of something 'too big to fail' failing that is the perspective. I'd like to think that doesn't give the Fed and analysis of the depression, about which Bernanke I understand wrote a good book, credit. And Greenspan probably meant his comment as not regarding the apocalypse but just near term. Personally I'd like be able to buy out of the hot Siberia of Dallas someday.
michael | October 2, 2007 03:46 PM
Good post.
Jonathan | October 2, 2007 09:17 PM
I also wondered about the beneficial side to the fall in housing prices. Now, people who wouldn't otherwise think of buying a house can now be in the market. I would count myself among those people, except for the fact that the demand for housing where I am (New York) is always so tight that prices always remain high here.
Elsewhere in the country, one important factor I can see dampening the rise of prospective home buyers is the high level of personal debt. Even lots of people who aren't trapped in sub-prime mortgages are in debt. There is a lot of credit card debt out there. And because a lot of people in this country have no medical insurance or are under-insured (a situation unique among first-world countries), debt often rises because of medical expenses.
Add to that the vast government deficit--and we're in trouble. Interests rates on personal loans will rise, I hear, for everyone but those with top-notch credit ratings. So the influx of home buyers will probably not be what one would have hoped for.
Joanne | October 13, 2007 02:10 PM
