Ready for the second real estate collapse?

Posted by Jason | Posted in Economics | Posted on 25-01-2010

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It looks like the housing market is going to head into it’s second slump. What will the government try to do next? Hopefully nothing, but we know the idiots in Washington will feel they need and can do something.

Sales of previously owned U.S. homes fell at the fastest pace on record in December, though prices rose for the first time since the credit crisis began in August 2007, an industry trade group said on Monday.

The National Association of Realtors said existing home sales fell 16.7 percent to an annual rate of 5.45 million units in December, a sharper decline than the 5.90 million unit pace expected.

via Hot Air » Blog Archive » Gov’t pulling out of mortgage support as home resales plunge.

The problem is there is a good chance we are going to have major inflation, so trying to prop up housing again with low interest rates is only going to make inflation worse. Then again, if you have enough inflation, housing might eventually be valued at their earlier inflated prices at least in nominal dollars. Of course, everything else will be more expensive as well, and the economy will have to be clamped down on to bring inflation down, so we’ll be back at it again. Isn’t government intervention great? They are just so good at stabilizing the economy.

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