During the housing bubble, houses rose to 10X the median household annual income in many areas.
They remain far above historical trends in many areas - about 7X in California, for example.
But rather than calling for a return to an economy based on productive activities with house prices
in line with incomes (3X median income has been the norm, and considered to be an affordable price for most families),
these experts apparently want a return to the days of unaffordable housing for the majority, and apparently, flipping,
speculation and crazy loans. After all, that's all the prices in the bubble were ever based on, and the prices STILL have not
fallen back in line with the historical trend yet.
Anyway, here is a disgusting puff piece in support of ludicrous house prices and the "Give a Trillion to the Tycoons and Put it on our Kids' Tab" Bill. Enjoy.
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/10/04/financial/f091118D01.DTLFor bailout to work, housing market needs to mend
By STEVENSON JACOBS, AP Business Writer
Sunday, October 5, 2008
(10-05) 00:16 PDT New York (AP) --
Washington's financial bailout plan is now law. So the credit spigot will start flowing again, banks will resume lending, and an economic recovery can begin, right? Wrong. Experts say the most important thing that needs to happen before the $700 billion bailout even has a chance of working: Home prices must stop falling. That would send a signal to banks that the worst has passed and it's safe to start doling out money again.
The problem is the lending freeze has made getting a mortgage loan tough for everyone except those with sterling credit. That means it will take several months or longer to pare down the glut of houses built when times were good — and those that have come on the market because of soaring foreclosures — before home prices start appreciating.
Housing is a critical component to the U.S. economy and by extension the availability of credit. Roughly one in eight U.S. jobs depends on housing directly or indirectly — from construction workers to bank loan officers to big brokers on Wall Street. A turnaround in housing prices would boost confidence in the wider economy and, experts hope, goad banks into lending again. "Housing traditionally does lead the economy through a recovery. I think it's going to be critical for a sustained recovery in this cycle, too," said Gary Thayer, senior economist at Wachovia Securities.
...
Rep. Barney Frank, D-Mass., the Financial Services Committee chairman and a key negotiator over the past weeks, said the measure was just the beginning of a much larger task Congress will tackle next year: overhauling housing policy and financial regulation in a legislative effort comparable to the New Deal.
...
U.S. home prices — down 20 percent from their peak in July 2006 — still have further to fall, and must hit bottom before demand picks up. The long-awaited bottom in prices could be a year or more away.Well, that's the only thing in this piece I agree with. Prices will continue to fall, at least for another couple of years, but it's a good thing, and I hope that after that, housing will stay more on a steady track like it did for most of the 20th century.
But it is not "traditional" that housing leads us out of recessions, unless you consider things beginning in the 90s to be "traditional".
Also, RW Frank. GIVE. ME. A BREAK. This POS legislation which adds hundreds of billions to the debt (sending much of the money to CHINA) and creates little to no economic stimulus. It is no New Deal (which created hundreds of thousands of jobs and infrastructure that created economic benefits for generations to come, even today) and Frank is no Franklin Delano Roosevelt.
:banghead:
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