http://www.businessinsider.com/the-housing-chart-thats-worth-1000-words-2009-2
This article presents an interesting, though strongly stated, view on housing prices. The author argues that there needs to be less focus on bringing housing prices back up and criticizes the factors that caused the housing bubble in the first place.
Thoughts?
"they skyrocketed by 86% due to Alan Greenspan’s irrational lowering of interest rates to 1%" I had a feeling that editor was going include Greenspan in the article. Greenspan's policy was absolutely ridiculous and a failure too. We should have listened to the economist John Taylor. He has been fighting for us all along...
ReplyDeleteIf you are interested more about this, read this article. http://mostlyeconomics.wordpress.com/2010/11/08/ben-bernanke-vs-john-taylor-again/
http://en.wikipedia.org/wiki/Taylor_rule
ReplyDeleteThis also talks about the Taylor Rule.
*** A Taylor rule is a monetary-policy rule that stipulates how much the central bank would or should change the nominal interest rate in response to divergences of actual inflation rates from target inflation rates and of actual Gross Domestic Product (GDP) from potential GDP.
This is my kind of article! I love that it points the finger in all directions rather than just blaming one group. Everyone is to blame for this mess. I tend to agree that prices will continue to fall, and that there is no real way to mitigate against this. Throwing good money after bad is not the answer.
ReplyDeleteside note: Is it me, or is it ironic that in the midst of a housing crisis, i still see and hear ads touting the benefits of home ownership, and talking about how now is a great time to buy. Sounds awfully familiar to where we were 2 years ago at the beginning of this. Hopefully people will have learned their lesson by now.
I would agree with Richard here. I think it's great that someone is finally willing to spread the blame and not afraid to report the scary numbers. No one wants to hear that housing prices should continue to fall but until the American consumer comes back to reality it's going to be near impossible to fix the economy.
ReplyDeleteI noticed that the date on the article was 2009. It would be interesting to see where housing prices are today. However, I would think that they would still be above what this writer is advocating.
ReplyDeleteI also believe that another article posted on this blog also referred to Obama's plan to use $50 billion for foreclosure protection never really panned out...
I think that the best option is to let the market decide the prices itself.
I found the chart provided in the article extremely helpful. I did not realize that housing prices in the early 2000s were so dramatically high as compared to previous years. I actually assumed that the high prices I heard about during that time were reasonable compared to previous years. The graph gives a visual explanation of why the market is so low right now and why housing prices are so low. Since the prices suddenly skyrocketed in the early 2000s, it makes complete sense that they came crashing down. These types of cycles are inevitable, and I believe more people should of saw this crash coming.
ReplyDeleteI thought the chart was great, too! Like Bianca, I didn't realize that the prices I was paying attention to were so incredibly inflated!
ReplyDeleteAlso this graph was super concise! Sometimes I get bogged down by text, but this made it clear.
I'd just like to comment on the section where they talked about how prices are not actually falling, they fluctuate but as they showed in their data housing prices have actually increased.
ReplyDeleteI like seeing the graph as a visual way of viewing the prices, and agree with Bianca when she says she believes more people should have saw this coming