How Good Is the Housing News?

March 7, 2012 the New York Times published an article How Good Is the Housing News?

Home sales have beat expectations and pending sales neared a two-year high. But prices are still descending. So President Obama has relied on the banks to voluntarily modify troubled loans. Those efforts were focused on reducing monthly payments. But it is just a more powerful form of relief. Now President Obama is trying again. The major banks will be required to promote loan modifications for troubled borrowers, including principal reductions for underwater homeowners. Mr. Obama has also promised a far-reaching investigation into mortgage abuses that is supposed to yield more accountability from the banks and more money for foreclosure prevention.

But some people disagree about this opinion because they think Housing prices were artificially driven up during the past three decades, and are now beginning to normalize. Lower housing costs are good news for consumers. But I agree about this opinion. Now we have a problem about falling housing prices. This problem was caused in the first place by a bubble that needed housing prices to rise quickly. If we get back to treating housing as housing first, and a long term way to maintain some financial security, then we'll all be better off. For those who are trapped in adjustable mortgages resetting to high rates (which doesn't make sense since rates are currently at historic lows), a program to refinance into long term, fixed rate, conventional style loans is a good idea. If homeowners still can't afford it, then it's time to try the short sale or maybe bankruptcy. I think absorbing the inventory, both current and phantom, will result in a stable market.