BlueFire

Denial: Collective Housing Delusions

How to solve the housing crisis:

Stop all current bailout actions and replace with the following 2 steps:

1) Use bailout money to purchase all foreclosing properties at absolute rock bottom prices.

2) Create a public works program to hire the unemployed to tear down every single foreclosed property in the nation. Every single one, no exceptions.

Kill the cancer, and increase demand for housing by eliminating the supply. Suddenly there is open land to develop with more modern, energy efficient structures.

Those who gained experience on the public dollar learning how to tear down houses can now be hired by private developers to build new houses.

Oh, and all mortgages must be held by the secondary mortgage market with no securitization permitted.

All those who foolishly bought crap just because some idiot stamped AAA on it - well, that is what is meant by caveat emptor!

Housing Data Shows Downturn Could Be Prolonged

The thing of it is that we are creating a huge inventory of properties being sold off at bargain basement prices either to investors at the preforeclosure stage as banks are forced to sell short, or as REOs as banks are forced to sell off this huge backlog. As a result, the housing values we are seeing are artificially low. These properties are being sold BELOW value. As a result, they pull down the comperable values of entire neighborhoods.

Now the inventory that needs to clear is still huge. But, anyone willing to buy and hold for a minimum of 3-5 years is going to make a killing in real estate. When that inventory does clear, there will be a significant uptick in real estate values as real buyers start paying real prices.

Patience, people. Everyone thinks in quarters. It's time to be making five year plans here.