Thursday, May 28, 2009
The Little Cottage...
Or a few scattered thoughts on the housing crisis. Atrios notes that things are going to get worse before they will get better, and that's certainly the case for those who are struggling to pay mortgages which are now higher than the value of their dwelling. Either they are going to lose whatever investments they have made in the house or they are locked in, unable to move. But have you asked yourself who might benefit from this crisis? It's not just people looking to buy for the first time (assuming they can get a mortgage from the deranged banking system.)
At the same time, if you compared average family incomes to the average house prices a few years ago it was pretty clear that something smelled off in the housing market: the "average" house was unaffordable (using the old rules) by the "average" family in almost every single area of the country. So the prices had to come down or the incomes had to go up. We all know which of the two happened.