McCain’s new proposal to fix housing market

[poorgradstudent]

I’m eagerly awaiting for one of the candidates to say “Housing prices are too high, they need to fall to correct further and raise affordability”.

The McCain plan is the opposite of what I feel we need. Let the FBs lose their homes, and let’s start over.

[Eugene]

[quote=poorgradstudent]I’m eagerly awaiting for one of the candidates to say “Housing prices are too high, they need to fall to correct further and raise affordability”.
[/quote]

That would be a false statement.

Housing prices are too high in some pockets of the country, but certainly not everywhere. There are many places where prices are “right” but too many people are upside-down, creating the potential for an overcorrection. The puzzle is how to prevent an overcorrection and at the same time avoid moral hazard.

McCain seems to be saying, let’s take all upside-down bubble owner occupied mortgages and rewrite them as fixed-rate mortgages with the amount of the loan = market value of the house. And that’s not necessarily a horrible idea. It saves low-end areas, but it does not do anything for those areas that haven’t corrected yet.

[Eugene]

[quote=poorgradstudent]I’m eagerly awaiting for one of the candidates to say “Housing prices are too high, they need to fall to correct further and raise affordability”.
[/quote]

That would be a false statement.

Housing prices are too high in some pockets of the country, but certainly not everywhere. There are many places where prices are “right” but too many people are upside-down, creating the potential for an overcorrection. The puzzle is how to prevent an overcorrection and at the same time avoid moral hazard.

McCain seems to be saying, let’s take all upside-down bubble owner occupied mortgages and rewrite them as fixed-rate mortgages with the amount of the loan = market value of the house. And that’s not necessarily a horrible idea. It saves low-end areas, but it does not do anything for those areas that haven’t corrected yet.

[Eugene]

[quote=poorgradstudent]I’m eagerly awaiting for one of the candidates to say “Housing prices are too high, they need to fall to correct further and raise affordability”.
[/quote]

That would be a false statement.

Housing prices are too high in some pockets of the country, but certainly not everywhere. There are many places where prices are “right” but too many people are upside-down, creating the potential for an overcorrection. The puzzle is how to prevent an overcorrection and at the same time avoid moral hazard.

McCain seems to be saying, let’s take all upside-down bubble owner occupied mortgages and rewrite them as fixed-rate mortgages with the amount of the loan = market value of the house. And that’s not necessarily a horrible idea. It saves low-end areas, but it does not do anything for those areas that haven’t corrected yet.

[Eugene]

[quote=poorgradstudent]I’m eagerly awaiting for one of the candidates to say “Housing prices are too high, they need to fall to correct further and raise affordability”.
[/quote]

That would be a false statement.

Housing prices are too high in some pockets of the country, but certainly not everywhere. There are many places where prices are “right” but too many people are upside-down, creating the potential for an overcorrection. The puzzle is how to prevent an overcorrection and at the same time avoid moral hazard.

McCain seems to be saying, let’s take all upside-down bubble owner occupied mortgages and rewrite them as fixed-rate mortgages with the amount of the loan = market value of the house. And that’s not necessarily a horrible idea. It saves low-end areas, but it does not do anything for those areas that haven’t corrected yet.

[Eugene]

[quote=poorgradstudent]I’m eagerly awaiting for one of the candidates to say “Housing prices are too high, they need to fall to correct further and raise affordability”.
[/quote]

That would be a false statement.

Housing prices are too high in some pockets of the country, but certainly not everywhere. There are many places where prices are “right” but too many people are upside-down, creating the potential for an overcorrection. The puzzle is how to prevent an overcorrection and at the same time avoid moral hazard.

McCain seems to be saying, let’s take all upside-down bubble owner occupied mortgages and rewrite them as fixed-rate mortgages with the amount of the loan = market value of the house. And that’s not necessarily a horrible idea. It saves low-end areas, but it does not do anything for those areas that haven’t corrected yet.

[yellow8yellowm]

[quote=XBoxBoy]My question isn’t which is better, my question is how can anyone possibly support this kind of nonsense with a straight face?[/quote]

We can safely assume that either Obama or McCain will be the next president. From a purely logical/realist standpoint, your vote or non-vote is going to influence which one will be in office. That is all there is to it. Which one would you prefer? We are not in 3rd grade anymore and cannot say, “I wouldn’t prefer either.” You are lying to yourself if you think your vote isn’t going to be a factor in deciding which one will be President.

Join a campaign, volunteer, or run yourself. Voting is our right, but it is the minium we can do to serve our own ends and your country’s.

[yellow8yellowm]

[quote=XBoxBoy]My question isn’t which is better, my question is how can anyone possibly support this kind of nonsense with a straight face?[/quote]

We can safely assume that either Obama or McCain will be the next president. From a purely logical/realist standpoint, your vote or non-vote is going to influence which one will be in office. That is all there is to it. Which one would you prefer? We are not in 3rd grade anymore and cannot say, “I wouldn’t prefer either.” You are lying to yourself if you think your vote isn’t going to be a factor in deciding which one will be President.

Join a campaign, volunteer, or run yourself. Voting is our right, but it is the minium we can do to serve our own ends and your country’s.

[yellow8yellowm]

[quote=XBoxBoy]My question isn’t which is better, my question is how can anyone possibly support this kind of nonsense with a straight face?[/quote]

We can safely assume that either Obama or McCain will be the next president. From a purely logical/realist standpoint, your vote or non-vote is going to influence which one will be in office. That is all there is to it. Which one would you prefer? We are not in 3rd grade anymore and cannot say, “I wouldn’t prefer either.” You are lying to yourself if you think your vote isn’t going to be a factor in deciding which one will be President.

Join a campaign, volunteer, or run yourself. Voting is our right, but it is the minium we can do to serve our own ends and your country’s.

[yellow8yellowm]

[quote=XBoxBoy]My question isn’t which is better, my question is how can anyone possibly support this kind of nonsense with a straight face?[/quote]

We can safely assume that either Obama or McCain will be the next president. From a purely logical/realist standpoint, your vote or non-vote is going to influence which one will be in office. That is all there is to it. Which one would you prefer? We are not in 3rd grade anymore and cannot say, “I wouldn’t prefer either.” You are lying to yourself if you think your vote isn’t going to be a factor in deciding which one will be President.

Join a campaign, volunteer, or run yourself. Voting is our right, but it is the minium we can do to serve our own ends and your country’s.

[yellow8yellowm]

[quote=XBoxBoy]My question isn’t which is better, my question is how can anyone possibly support this kind of nonsense with a straight face?[/quote]

We can safely assume that either Obama or McCain will be the next president. From a purely logical/realist standpoint, your vote or non-vote is going to influence which one will be in office. That is all there is to it. Which one would you prefer? We are not in 3rd grade anymore and cannot say, “I wouldn’t prefer either.” You are lying to yourself if you think your vote isn’t going to be a factor in deciding which one will be President.

Join a campaign, volunteer, or run yourself. Voting is our right, but it is the minium we can do to serve our own ends and your country’s.

[scaredyclassic]

so insteadof the past practices where appraisers would be paid to come in with high appraisals, now the emphasis will be coming in with the lowest possible appraisal and then claiming poverty? and if these regster as sales, wont this practice decimate housing prices. setting aside the moral hazard issues, which are obviously kind of sickening for responsible people who waited to buy, wouldn’t this accelerate a race to the bottom for “market value” as the lower the appraisal the better deal the homeowner (that term needs to be made illegal under this new law and its use made punishable by ineligibility for any further govt aid)) would receive. who would jump in and buy a house when all the current people are getting free money from the govt? wouldnt you just wait for that fiasco to play out so the market can do its work again?

[scaredyclassic]

so insteadof the past practices where appraisers would be paid to come in with high appraisals, now the emphasis will be coming in with the lowest possible appraisal and then claiming poverty? and if these regster as sales, wont this practice decimate housing prices. setting aside the moral hazard issues, which are obviously kind of sickening for responsible people who waited to buy, wouldn’t this accelerate a race to the bottom for “market value” as the lower the appraisal the better deal the homeowner (that term needs to be made illegal under this new law and its use made punishable by ineligibility for any further govt aid)) would receive. who would jump in and buy a house when all the current people are getting free money from the govt? wouldnt you just wait for that fiasco to play out so the market can do its work again?

[scaredyclassic]

so insteadof the past practices where appraisers would be paid to come in with high appraisals, now the emphasis will be coming in with the lowest possible appraisal and then claiming poverty? and if these regster as sales, wont this practice decimate housing prices. setting aside the moral hazard issues, which are obviously kind of sickening for responsible people who waited to buy, wouldn’t this accelerate a race to the bottom for “market value” as the lower the appraisal the better deal the homeowner (that term needs to be made illegal under this new law and its use made punishable by ineligibility for any further govt aid)) would receive. who would jump in and buy a house when all the current people are getting free money from the govt? wouldnt you just wait for that fiasco to play out so the market can do its work again?

[scaredyclassic]

so insteadof the past practices where appraisers would be paid to come in with high appraisals, now the emphasis will be coming in with the lowest possible appraisal and then claiming poverty? and if these regster as sales, wont this practice decimate housing prices. setting aside the moral hazard issues, which are obviously kind of sickening for responsible people who waited to buy, wouldn’t this accelerate a race to the bottom for “market value” as the lower the appraisal the better deal the homeowner (that term needs to be made illegal under this new law and its use made punishable by ineligibility for any further govt aid)) would receive. who would jump in and buy a house when all the current people are getting free money from the govt? wouldnt you just wait for that fiasco to play out so the market can do its work again?

[Author]

Posts