In Housing (as in all things) the free market works
Posted on April 6, 2008
Filed Under Happy Valley, Statistics, Buying Real Estate, Real Estate |
George Will is always good, this morning particularly so because it’s particularly pertinent, and should give a little more definition as to where I stand on government intervention. It’s worth reading in its entirety, but key:
The market, which bewilders and annoys liberals by correcting excesses without the supervision of liberals, is doing that as housing prices fall far enough to stimulate demand. Witness this recent Financial Times headline:
“Property sales pick up as prices plummet.”
The story began: “Sales of previously owned homes in the U.S. rose for the first time in seven months in February, while sale prices fell by their most in at least 40 years.” By golly, the Gershwins were right: The age of miracles hasn’t passed.
We can look to Happy Valley, our favorite comparative, as a mini example: As noted before, YoY median dropped 21% in February, 5% in March. So while homes going under contract in the greater Portland area - where median has remained in the black - dropped in March by 30%, in Happy Valley YoY was exactly the same.
That’s not to say one month signifies a trend, nor does it in any way indicate it’s going to take a 21% drop in PDX for sales to tick up (it won’t).
It does say the market works.
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12 Responses to “In Housing (as in all things) the free market works”
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Jeff — It’s funny how liberals are so often both shocked and angered at how the ‘physics of economics’ work every time. I wonder if falling off their garage roof, they feel the same way when they fall in a downward path every time?
Jeff! Terrific post on BHB - I just read it this morning - something that’s been going around in my mind for a month or so. I’ve got a followup brewing; hope to have it posted by tonight.
And for the record, I suspect that a healthy percentage of those in media believe that should Obama ever fall off a roof, he’ll fall UP …
Thanks Jeff — I want to see your take later today.
If there’s a God in Heaven, and there is, He’ll ensure Obama is the Demo candidate. I’ve been saying to anyone within earshot for a year: The Elephants could run Daffy Duck and Goofy and beat anyone the Donkeys chose to put forward.
I also said the election may very well emulate 1980. Reagan was a solid underdog — until, that is, Carter kept talking. I see a potential historical repeat here.
Your thoughts?
Interesting post. Thanks.
I understand what you’re saying here, but I wonder if you’re consistent about the free market analysis. I assume that you (and Mr. Will) would also agree that the Bear Stearns bailout is unconscionable and indefensible. Because if we extend the logic of free market operation, then surely Bear should have been let to go to bankruptcy, right?
If you think that Bear Stearns’ treatment was proper, then how can you advocate for free market when it comes to consumers but bailouts when it comes to Wall Street?
I don’t mean to be snarky…it’s more that I see some real inconsistency between the free market analysis and the bail outs–at least in some quarters.
Jeff, we’ve already had a peek through the Obama screen; he’s no less a pandering politician than any. During the general the screen will be pulled back completely: the public is fickle when it comes to idolatry, especially idolatry without substance.
David, no snark taken. In principle I agree with you completely, but I honestly don’t know enough detail about the buyout of Bear Stearns to reply with any authority. Intuitively I’m not sure ‘bailout’ is an appropriate descriptive, given the company was bought for pennies on the dollar (and given JP Morgan, by contract, will pay back the taxpayers). Unless you consider a short sale a bailout of a mortgage holder by a lender?
Butch: This isn’t Democratic Underground nor the Daily Kos. You want to play four letter invective go play there. Here you’re locked out.
If the markets were “Free” Bear Stearns would be a memory. If the markets were “Free” there wouldn’t be a handful of people setting the most important price of all: the price of money- by shifting the interest rates to manipulate the economy.
You can thank 30 years of conservatism for the economic armegeddon you’re about to experience. Enjoy.
I’m not sure you can call the losses investors took a “bailout”
Yes it saved BS from BK - and thus prevented the domino chain that would have taken down our entire financial system (JMP has 7.7 trillion in credit derivatives alone).
But a lot of BS employees and investors just lost more or less everything.
As well they should. They should have lost even more. The CEO should not have been allowed to cash out and walk off with 60 million. A fair, effective government would confiscate 90% of the wealth on Wall Street and use THAT money to bail out the fragile financial system.
We demand more of the poor for their measley support than ever before. Why let the rich skate? Most of them should be in PRISON.
Yep, Looks like the markets are working great to me. Unfortunately, the Fed doesn’t agree!
Fed: Severe downturn possible
Members of the Federal Reserve’s policy-setting committee worried at their most recent meeting that housing and financial market stress could trigger a nasty slide in the economy, even as inflation pushed higher, minutes of the meeting released on Tuesday show.
Faced with renewed deterioration in credit conditions in March, the Fed unleashed a rare string of special measures aimed at pumping liquidity into malfunctioning financial markets.
I wonder what George Will has to say about this? LOL
I agree with McCain’s statement: “it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers.” Unfortunately, Will leaves out the rest: “Government assistance to the banking system should be based solely on preventing systemic risk that would endanger the entire financial system and the economy.” Translation: Bear Stearns gets a golden parachute, and Joe 6-pack gets the shaft.
Why is this situation so typical of Republican politics? The sanctity of the individual responsibility applies only to the small and weak. Lie to the consumer and misrepresent loan terms? No problem: “the markets will take care of it.” The big boys get their hands in the government troff when times are good or bad. What a racket. The rest of us? Well, we are on our own.
That’s easy. Republicans ALWAY side with power, influence and the status quo no matter what the situation. The police over the accused, management over labor, teacher over student (unless it’s their vile progeny), rich over poor. They fought women’s rights, civil rights, gay rights. I’d bet my last dollar they bristle at the sight of people protesting the Olympics in Paris, London and San Francisco. I have no doubt they sympathize with China. They HATE protests against power. In the 80s they HATED protests against Aparteid. They’ll do business with anyone who can make them a buck. They’d eat their mothers if they thought they’d shit money.
That’s who the majority of this country put in power.