Robyn Seymour - Housing Correction a Welcome Idea

Housing market is slowly becoming a buyer's market. Prices have been descending downward. It appears that people are getting tapped out. Cancellation rates on contracts and price concessions have become an increasing pattern. Housing depreciation has hit for several straight months. Many will say this is a bad thing since the less people buy the less will be built and the less economic activity and all the rest. Well, good. It appears much of this market boom was built on a shaky foundation ready to come tumbling down. It was basically built on credit, credit, credit. The average American salary is roughly $40,000. Even with the wife working the cost of a house is a severe strain along with all the usual things to go along with it. Thus, all sorts of financial "schemes" have been thought of- along with low interest rates- to make an unaffordable house, well, affordable. Be it adjustable rate mortgages or virtually no money down risks, the housing market became a gamble.

As usual, many people keep betting their houses will just keep going up in value. In places like New York, California and South Florida, the price increases have been utterly outrageous. Some of the air is starting to come out of the fat balloon. The average price for a house is now about $225,000. Predictably we see the old "pig-out." People get a sense something is booming and then grossly overreact. Thus, we have around 4 million units of housing just sitting around due to over building. Buyers will just keep on waiting for things to come down a bit more.

States like Indiana and Ohio have seen their foreclosure rates go up since the auto industry did its workers in thanks to the "joys" of free trade. If you have no job or no decent paying job, well, no house to purchase. That is the heart of the problem, of course. If there is no "real" money then the house of cards has to come crashing down the way it did during the internet boom. Shaky deals, weird lending policies, etc. can go on for awhile but like the old Wendy's commercial of "Where's the beef?" the money must be there. No beef equals a housing disruption. Really just common sense.

Most economists agree there is more "shaking out" to do. Good. If you don't have the money then you really have no business owning homes. Painful but true. If you have to get a deal where you put no money down or very little for a house that is too expensive for your budget and then you "hope" you can get the money back due to housing appreciation, well, good luck. Some get lucky on that one. But for the average person that is a stressful gamble. Better to pay what you can afford on traditional mortgages. Of course, some people are gamblers by nature. But do not be shocked when your gamble turns to dust. If you are one of the "big boys" like Donald Trump or Steve Wynn or lesser known individuals with the economic means then it is nice to you.