http://www.msnbc.msn.com/id/38158763/ns/business-real_estate/

How much of an effect is this having on the housing market? These are the people who can actually afford to make payments on their houses and simply choose not to, instead treating them as they would any other investment. This is almost certainly driving down the price of homes in the individual neighborhoods more than in areas of more modest means. The fact remains, however, that all these houses are still being put on the open market and empty houses anywhere bring prices down everywhere to a certain extent. It seems there is still a long way to go as far as housing prices bottoming out is concerned but the quicker that happens, the better.

Should we stop looking at housing as a major means of investment though? It seems that these people did more to create the bubble buying second and third homes for which they had no need. I've read from multiple sources that 50 and 60 years ago buying a home was simply finding your own patch of ground on which to live and was rarely considered an investment. Obviously real estate can be a lucrative investment if done correctly and intelligently. But is trading it around like baseball cards and driving up prices really the best way to create a stable market, especially in something as critically important as people's homes?

7/9/2010 2:17:44 AM

too bad personal responsibility is a thing of the past.

7/10/2010 1:28:17 AM

Corporations do this shit all the time and it's considered a good business decision. When individuals do it, people (like ^) call them deadbeats. I really don't see the difference.

7/10/2010 1:32:51 AM

the difference is that the law doesn't require people to be soulless and amoral in the process of maximizing shareholder value

7/10/2010 1:44:54 AM

Who are each persons' shareholder?

7/10/2010 2:16:24 AM

^^but people should be soulless and amoral in the process of maximizing their own value, that ability to rationalize, predict, and stabilize behavior is the most valuable product of capitalism. If it is in their best financial interest to default or whatever, they should do it. A system works better when human decisions can be deciphered by game theory analysis.

7/10/2010 2:37:38 AM

because individuals are systems

7/10/2010 2:47:05 AM

This is why I tell people environmental economics was the best class I ever took. It looks at society as a whole instead of individual profit/loss. If the net gain to society is positive it's a good thing, if the net gain is negative it's a bad thing. These people fucked up (as individuals) and they're exacerbating the problem by taking the easy road out. It's hard to fault them for wanting to look out for themselves, but the negative impact on society as a whole will be worse as a result. It's an interesting dilemma.

7/10/2010 4:18:38 AM

Quote :

"too bad personal responsibility is a thing of the past."

It would be irresponsible not to default on a house that is underwater. If you bought your house for 400,000 in 2005, and now it won't sell for 250,000, are you really going to continue paying on it?

7/10/2010 4:21:00 AM

So libertarians have no sense of social responsibility? Is that what everyone should take from this thread?

7/10/2010 4:25:55 AM

That's what you'd like to take from this thread. You can expect people to act in their own self interest. You have to structure everything around that simple fact, and avoid moral hazard like the plague.

The housing bubble was created due to the Federal Reserve and the government artificially propping up the housing market. When someone bought a house that has now gone down 75 or 100% in value, the house was never actually worth what was paid for it. The price paid was the bubble price. The banks didn't do their due diligence to 1) make sure these houses were actually worth the money or 2) ensure that people could pay their loans in full. Now they're on the hook for all of it, which I'm fine with, because our banking system is a huge scam anyway. Banks make money from loaning out money that they don't even have in reserves. Fuck 'em.

7/10/2010 11:40:39 AM

Despite being banned in 1833, debtors prison still exists...but everyone knows it only applies if you're in debt to the government or your wife.

Increasingly though, courts are being used to jail individuals for failing to pay private consumer debt. The collection agency files a lawsuit and if you don't show you're jailed for failing to appear. If you do show the court mandates a payment plan. If you don't pay then, you're jailed for violating a court order.

I wouldn't walk away from an enormous debt and not expect to face jail time at some point in the future.

7/10/2010 12:36:17 PM

Quote :

"Corporations do this shit all the time and it's considered a good business decision. When individuals do it, people (like ^) call them deadbeats. I really don't see the difference."

the difference is the taxpayer getting stuck with the tab via Fannie and Freddie

7/10/2010 1:20:42 PM

Quote :

"So libertarians have no sense of social responsibility? Is that what everyone should take from this thread?"

I didn't need this thread to know that.

7/10/2010 2:23:28 PM

Quote :

" It would be irresponsible not to default on a house that is underwater. If you bought your house for 400,000 in 2005, and now it won't sell for 250,000, are you really going to continue paying on it?"

The irresponsible thing to do would be to walk away. The person who bought the house understood the house was an investment and could become more valuable or less valuable like anything else. It is not up to the tax payers to cover their ass. If they were not willing to assume that risk, then they should have never bought the house.

7/10/2010 2:26:28 PM

The bank was taking a risk by loaning them the money.

Quote :

"I didn't need this thread to know that."

Just curious, what do you take "sense of social responsibility" to mean?

[Edited on July 10, 2010 at 2:50 PM. Reason : ]

7/10/2010 2:49:47 PM

Shaming people into paying for their worthless houses might work on the lower to middle class, but not on the rich. And unfortunately the rich are the ones who are most likely to strategically default. So we're pretty much fucked unless we do something about it. Or I guess we could pray to the gods of capitalism that the economy picks back up. But do I blame people from acting in their own self-interest? No.

7/10/2010 2:49:49 PM

Capitalism hasn't been allowed to work for some time. An "independent" board, disconnected from the public and reality, is setting interest rates. The government subsidizes loans, or backs them in some way, which distorts the market. The housing bubble couldn't have happened in a free market. Only through botched monetary policy and moronic legislation could our current situation have been created.

Housing prices need to fall substantially, even now. You should not have to take out a 15 year loan to buy a home. People should be able to put a lot more money down on a house, and they should be able to pay the loan off within 5 or 10 years, if even that. The government is doing everything it can to keep home prices propped up, though. Thank God someone is looking out for the banks.

7/10/2010 2:57:51 PM