Housing prices peaked 40 months ago in May 2006. What have we learned from the great housing bubble and crash ?
Obviously, we have learned that housing prices can be extraordinarily volatile. No one can ever again say foolish things like housing prices never fall. People who bought with a standard mortgage in the years close to the boom have lost all of the equity in their houses. Buyers and lenders should never again think that an area's recent price increases are the sign of a strong market where prices have nowhere to go but up. In the long run, price increases are followed by price drops, and caution needs to be taken in booming markets.
The second lesson of the housing debacle is that there is extraordinary pain in both housing busts and booms. When housing prices soared, ordinary Americans found it increasingly hard to afford a house. During the boom, many hoped that housing prices would stop rising and even decline, not understanding the terrible impact that declining housing prices would have. Large swings in housing prices, can be extremely painful.
The third lesson is that the response to the American housing crisis has been embarrasingly foolish. We've used public resources to encourage ordinary Americans to bet all they could on the housing markets. We have allowed the bail out of financial firms that had lost too much on those mortgage gambles or were deemed to big to fail. We continue to provide billions of tax payer dollars to the same institutions that were instrumental in creating the bubble that burst what once was the American Dream.
All of these "lessons " leave me wondering what the next American Dream will be.
Perhaps a much less volatile, more comforting lifestyle with a reassurance that we live in a country that cares for it's citizens emotional, financial and physical well being. That the people we've put in charge are truly capable of handling those responsibilities. That we the people and our families are the beneficiaries and not the victims of big business and big government.
For more on today's housing market call 561-306-6736 or email rebuygeorge@yahoo.com
Posted by George Sinacori at 6:46 AM
Comments(0)