Help The Housing Market "Bounce Back" By Buying Overvalued Homes!
USA Today has a front-page weeper today about how some folks are having trouble selling houses for the prices they want:
Colleen Wells heard the housing market was supposed to be picking up, so she felt optimistic when she put her 60-acre farm in Ocala, Fla., up for sale early this year.
When no one bought the farm at its asking price of $894,000, she slashed the price to $699,000.
Now it's been more than 11 months, and she still hasn't found a buyer.
"Nothing seems to be selling right now," Wells says. "There just hasn't been a whole lot of interest."
Housing prices are down 30 percent from 2005, the market's historic high, but a recent increase in sales doesn't mean the market has touched bottom. Or, more precisely, reset to what those houses are currently worth.
Economists caution that a good part of the improvement is tied to government assistance — low interest rates that stem from the Federal Reserve's heavy buying of mortgage securities and a tax credit worth up to $8,000 for first-time home buyers. That credit has been extended and expanded to include some repeat home buyers for 2010.
So in the name of ending a financial crisis that came about in large part due to pumped-up housing prices, the government's response is to…pump up housing prices via various giveaways. We must at all costs not allow the housing market to reflect what underlying assets are actually worth. Because if we did, we might actually start the process of getting on with the rest of our lives.