Little Confidence In Stabilizing Home Prices Among Americans

Good news and bad news on the housing front. The bad news is that Americans fear that home prices will drop more sharply this year. The good news; just reread the preceding sentence.

The negative psychology that has developed around housing means that buyers are going to be reluctant to jump back into the market. Fewer buyers, the longer it takes for housing to find a bottom and the longer its going to take to climb out of our pit. A recovery in housing is usually one of the sectors of the economy that leads in a rebound.

All that may be worth it if Americans have finally rediscovered what their parents and grandparents knew. Specifically, that you buy a place to provide shelter and if it happens to appreciate well, that’s an added benefit. Don’t treat it like an ATM and don’t count on it to fund your retirement.

If we manage to take one asset off the board that people want to speculate in then that has to be considered a positive development. The trick of course is going to be maintaining this new found sobriety as vested interests try and convince us not to believe our lying eyes.

The government’s would like us all to revert to the status quo ante but just for a little while. Spend and leverage up that property but pull back slowly after that. It’s still an open question as to whether they do manage to get us all back to where we were but this new found skepticism about housing indicates that we might have reason to hope they fail.

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