19 February 2009

Don't ReInflate that Bubble

We should not attempt to re-inflate housing prices. Many people paid too much for new houses built in greenfields. Better said by Yglesias:
...It’s important to understand, however, that we’re not talking about real assets that vanished. The houses are still there, and they’re still as good or bad or useful or non-useful as they ever were. What’s vanished is a speculative mania, and public policy can’t—and shouldn’t—create a new one.


kid-cincy said...


And, people were paying too much for condos on the river, and around town. I'm not sure what the occupancy rate at he Ascent is, but I can count the empty decks and windows without curtains, and I'm guessing the building is half empty. As it should be, for the prices they were asking.

How's that condo development on West Fourth St. in Cincinnati coming along? It seems to be taking forever to get done.

My guess is, there isn't (and never was) enough demand for all the new condos being built.

Let's let the market work all this out. If building owners can't get their units sold at the price they wanted, they can cut the price, or leave them empty. Those who were unlucky or foolish enough to pay full price can take the hit when they try to sell. Or they can stay put.

Everyone focuses on the people suffering from the price declines/ correction, but how about those people who eventually benefit by buying the units for a lower price? And the money they save can be spent on other things, which helps the entire economy.

I just wish the government would stop trying to fix the mess. Why should those of us who live within our means bail out people who refinanced or took out home equity lines of credit so they could buy toys and vacations? Or, more accurately, why should our children pay for it?

CityKin said...

^ask 5c4war7z, he just moved into that building.

Condo prices are holding fine downtown, especially the ones in old building rehabs.

And as for the debt that our children will be paying for, ask your president Bush why he doubled the debt in 8 years. That money went overseas. At least this time it is staying in country to build infrastructure here.

Radarman said...

The Ascent is largely sold except for the top units. Cincinnati was never part of the real estate bubble except for some pretentious suburban developments. What we need to figure out is why the much less attractive, similar size Milwaukee was able to build and sell 3000 downtown condos while we're still in the low hundreds.

DP said...

the New Yorker has a really good article about the real estate market in Florida, likening it to a Ponzi scheme.

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