Robert Samuelson is correct about this: housing prices will have to fall dramatically to clear the market, and that is good news for buyers. But here is what he does not take into account: there are far too many homeowners because the federal government has subsidized homeownership since the New Deal. In a market economy, there would be more scope for the landlord, and more people would rent.
NB: being able to keep some of your own money–the mortgage tax deduction–is not a subsidy. But the Federal Reserve’s lowering of interest rates, and the actions of such fascist agencies as Fannie Mae and Freddie Mac, and such socialist agencies as the FHA and VA, have wasted huge amounts of wealth by directing it into a consumption good masquerading as an investment.
A recession or depression always brings clarity; the malinvestments of the boom are revealed for the busts they are. That includes a huge number of now-overpriced houses and condos. Once prices fall enough, we have a chance for more rationality in housing. But in true FDR, Depression-lengthening, style, the feds and the Fed are trying to prevent price declines. (Thanks to Joe Schembrie.)11:30 am on March 6, 2008 Email Llewellyn H. Rockwell, Jr.