Well, it looks like our pandering politicians and their desperate contributors, the banks and investment firms, will do whatever it takes to keep housing prices levitated at their current grossly inflated levels, the better to rescue over-leveraged lenders and bankers, investors facing deep losses, and buried homeowners who borrowed over their heads.
The Republicans are determined to bail out the financial industry at any cost to our currency and the economy as a whole, while leaving underwater homeowners to "take responsibility". This is the big problem with the Repugnants- their notion of "free enterprise" and "market capitalism" means rob the population at large in order to dispense Corporate Welfare by the billions to major corporate contributors, and free them from the normal business risk entailed in pursuing Free Enterprise, while passing on the losses to the population at large.
The Dummycrats, of course, are pandering to the Common Man after their usual fashion, by proposing that anywhere from $ 30 Billion in economic stimulus, to $400 Billion in funds to back up troubled mortgages, in a plan endorsed by both Clinton and Obama. The Dimocrats don't seem to be able to grasp that the money applied to propping up greed-crazed borrowers in houses they never had any business buying to begin with, is money taken away from the most disadvantaged people in this country, the extremely poor.
It is also money taken away from the renters of this country, who either couldn't quite afford to buy on the terms offered, or who were dismayed at the types of places they could afford on a mortgage that made sense. Once more, the honest and prudent are bailing out the unscrupulous, the greedy, and all the folks who wanted to Feel Rich for five minutes.
What this means is that people sidelined by the inflated prices will wait that much longer for an opportunity to buy, while their taxes help people like the Park Ridge couple I recently heard of from their neighbor, a friend of mine- they "bought" a house costing $900,000 on an income of $60,000. Such people will now get the benefit of tax-funded programs in which the government exchanges zero-coupon government bonds for the junk CDOs containing mortgages on properties worth half the face amount, or, via a new proposal, government agencies will refinance the underwater borrower via federally-guaranteed FHA loans in which a substantial percentage of the original loan is written down by the lender and a new one written and guaranteed with our tax monies, to the detriment of moderate-income borrowers who will have to pay more in insurance on FHA loans to offset the high default rate of these mortgages.
Market capitalism, permitted to work unhindered by politicians and bureaucrats, is swiftly forcing home prices down to their fundamental level, as determined by local rents and incomes. However, neither the "conservatives" nor the "liberals" will let the market do its work on the absurdly overpriced housing market, to the detriment of both the "free market" that the conservatives love to tout, and to the least advantaged populations that the "liberals" effect to champion.
Let honest market capitalism do its work on unscrupulous lenders and self-indulgent borrowers, so that we Angry Renters can get our chance at honest home ownership.