David Streitfeld in the NY Times gets around to a topic I've addressed multiple times on these virtual pages already: letting home prices fall to afforable levels which will attract new buyers.
"Over the last 18 months, the administration has rolled out just about every program it could think of to prop up the ailing housing market, using tax credits, mortgage modification programs, low interest rates, government-backed loans and other assistance intended to keep values up and delinquent borrowers out of foreclosure. The goal was to stabilize the market until a resurgent economy created new households that demanded places to live.
As the economy again sputters and potential buyers flee — July housing sales sank 26 percent from July 2009 — there is a growing sense of exhaustion with government intervention. Some economists and analysts are now urging a dose of shock therapy that would greatly shift the benefits to future homeowners: Let the housing market crash.
When prices are lower, these experts argue, buyers will pour in, creating the elusive stability the government has spent billions upon billions trying to achieve."
As I said, I've written about this before, so I don't feel the need to dwell on it, but needless to say, I agree that home prices should be allowed to settle to their natural levels.
disclosure: long a home