Tuesday, February 3, 2009

Solution to Housing Crisis

Of course, it is obvious from an individual point of view, you should walk from your upside-down home. But what happens when everybody is upside-down? We are rapidly approaching that very situation, as home values are already at pre-bubble prices (Spring 2004), and rapidly falling.

Someone please answer this question: What happens when everyone is upside-down? This is no idle question. We are already approaching the 50% mark, which is way past the tipping point.

The solution is actually quite obvious: After we nationalize the banks, we can begin the recovery by writing off mortgage debt and gving away the huge bank-owned housing stock in lotteries (or somesuch process).

Unfortunately, our leaders probably won't come to this sane solution until there are widespread homeless camps and the squatter problem has swelled out of control. No one seems to get the basic problem: these homes cannot be sold. A normal recovery is beyond us, it is not possible at this point. Leading to the ridiculous idea being floated by some that excess housing should be destroyed.

No comments: