NYT: Housing Woes Bring New Cry: Let Market Fall

Basically, the government has to screw the new buyers if they want to help the older buyers(and their banks) and spend a great deal of tax payer money in the process.

A couple of note worthy sections/comments
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** A CALL FOR FREE MARKET****************
“We have had enough artificial support and need to let the free market do its thing,” said the housing analyst Ivy Zelman.
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**THE LAW OF UNINTENDED CONSEQUENCES*****
Michael L. Moskowitz, president of Equity Now, a direct mortgage lender that operates in New York and seven other states, also advocates letting the market fall. “Prices are still artificially high,” he said. “The government is discriminating against the renters who are able to buy at $200,000 but can’t at $250,000.”
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***IN FOR A PENNY IN FOR A POUND OR IF WE STOP WE LOOK STUPID HERE******
The government is on the hook for many of these mortgages, another reason policy makers have been aggressively seeking stability. What helped support the market last year could now cause it to crumble.
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**AND GOV'T MORTGAGES FOR LITTLE DOWN MEANS THE GOV'T IS ONLY SELLING A CALL OPTION ON A PROPERTY**

Since 2006, the Federal Housing Administration has insured millions of low down payment loans. During the first two years, officials concede, the credit quality of the borrowers was too low.

With little at stake and a queasy economy, buyers bailed: nearly 12 percent were delinquent after a year. Last fall, F.H.A. cash reserves fell below the Congressionally mandated minimum, and the agency had to shore up its finances.
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It will remain a strong buyer's market for the next year at least.

I swear I was certain that this was another Riversider thread when I first saw the title. Me thinks Baier = Riversider.

LOL,
must be a convert.

http://streeteasy.com/nyc/talk/discussion/22523-govt-discriminating-against-future-home-owners

The simple fact that all the free market supporters don't want to accept is that if the govt. allows home prices to completely crash, the banks would all go under.

Let markets function.

Otherwise, what next? Bailing out people's 401(k)s?

Didn't the govt. not indirectly bail out peoples' 401ks when they bailed out the banks? It always seems that conservatives only oppose bailouts for the "little" people. They have no problem bailing out banks, but they tell the struggling homeowner to go F themself.

The 401(k) analogy is perfect, so why not just retire people on Social Security?

By analogy, if government/taxpayers fund retirement checks, why not have government/taxpayer fund affordable housing?

Now let the market crash, stop subsidizing people's home ownership via low-rate mortgages and build rental housing with government/taxpayer money, and rent it to working people for what working people's (market rate) wages can afford, i.e., 25% of net pay.

Hmmmm.............. smells a lot like NYCHA projects. Well, what about that?

So your proposing that the NYCHA build more projects? Well, that's one good way to cause prices to crash. Of course there will be few takers even if the price crashes 50, 60, or even 70 percent.

Well, if you can calculate how many $$$$ have been spent on propping up home resale prices and new construction prices, why not spend those $$$$ building affordable rentals instead?

More NYCHA projects? I don't know. Most of those look like the new construction condos are going to look in 15 years, so why not?

Why do any housing subsidy. It would be far cheaper and prevent the creation of a dependent class if the gov't just did tax credits that went directly to the renter if they fell below poverty level or some other metric.