Posted by
Tim Blessing on Tuesday, April 01, 2008 7:31:06 PM
Housing is an interesting problem that the Federal Government handles on a tangential basis.
There is the department of housing and urban development, which I do not know the functions of in relation to this issue.
There is Bankruptcy Court in the areas of Chapter 11 and Chapter 7.
Most of these people took loans out on adjustable rate mortgages, which are flexible in their rates.
These people who are being foreclosed will move into apartments or public housing as their new homes.
This will cause a backlog in the housing market that will further depreciate housing values.
A Buyers Market rather than a Seller's Market.
The question is will it be so big that the real estate market will totally collapse?
I do not have an answer for that issue simply because I do not have all of the relevant statistics.
History says we have these boom and bust cycles in real estate.
Principle says for the government to stay out of it.
It demands rigorous analysis.
It is a demand side problem and a supply side problem.
Demand will fall simply because people will be paying off prior debts.
Supply will increase do to foreclosures.
A meltdown on both sides.
I suggest bankruptcy court protections simply because we know their track record in dealing with individuals and companies and the system is already set up.
A little unorthodox, but legitimate use of government power