I agree with what Lawrence says but not what he means…..

by Tom on November 10, 2009
in Market Musings, house prices

In a report issued by the National Association of Realtors, they talk about how housing prices are still falling compared to last year (year over year). I don’t think that really surprises anyone, so I’m not going to talk about that.

What I’m going to pick on is what Lawrence Yun, the choir boy for NAR said. See below and then I’ll tell you I agree with what he says but not what he means…..

Home Prices Fell Further In Most Parts of US in 3rd Quarter – Real Estate * US * News * Story – CNBC.com

“The decline in the national median price has moderated recently, and a shrinking supply of unsold inventory suggests we are getting closer to price stabilization in many areas, ” said Lawrence Yun, the group’s chief economist, in a statement. “But we need a steady stream of financially qualified buyers to further reduce inventory and get us to a self-sustaining market.”

The part in bold is what I’m talking about.   Yes, if we have a steady stream of financially qualified buyers, that will help reduce inventory and get us to a self sustaining market.    But, if you or the reporter from CNBC pushed him further on what it takes to get a steady stream of buyers, I’d be willing to say that he’s going to come up with something along this line:

We need banks to be more flexible with their underwriting requirements.   They are turning too many borrowers away.

We need to expand and further extend the home buyer tax credit.   $15,000 minimum.

We need to lower downpayment and cash reserve requirements.

Lawrence is missing the point.   What we need is not those type of “reinflate the bubble” policies.   Instead, let me propose a couple of other alternatives:

Let’s lower the tax rates so that everyone has more money to spend and invest.   History has proven that actually stimulates growth and increases tax revenues. Oh and growth creates jobs which creates……

Let’s develop foreign trade policies that create US jobs not ones that cost jobs.

Let’s clean up, reform and deleverage the banking and financial system so that healthy banks can actual do what they were supposed to.    Exactly what do I mean by that?     That’s a topic for another day and another story – the reform of the banking system could be a 12 hour webinar.   Big topic.

We need jobs and until we can solve the unemployment mess, we’re not going to see a truly self sustaining housing market.

I’ll have more later, in the mean time, let me know if I can be of help.

Tom Vanderwell