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The Housing Bubble

 

The drop in housing prices in many parts of the country is not necessarily a bad thing. The value of homes in many areas of the country was increasing at an unsustainable rate that had absolutely no basis in reality. It wasn't demand, it wasn't the cost to build those homes, the price of wood and labor did not rise with the price of the homes; it is because the prices were being artificially inflated by everyone involved in the sale of homes; from the builders, to the bankers giving the loans and in turn packaging them up and selling them to investors, to the buyers of those securities, to the buyers of the actual homes, likely some of you people reading this, we consumers that wanted our investment to continue to increase at such an astronomical rate.

It wasn't real, and the reality is that if the bubble continued it would have made things much more difficult for future generations to buy homes in many areas of our country. It would be like a couple fresh out of school trying to buy real estate in Manhattan, except without any of the actual value that is derived from the huge demand for real estate in Manhattan. The truth is that everyone involved was at fault, including the consumer. It's understandable though, of course the businesses and workers involved wanted to make as much money as they possibly could, and the consumer simply wanted a solid investment that they hopefully wouldn't have to worry about in the future, something that they could rely on, something that would always be there for them.

Sadly most people didn't see the bubble bursting, as is the case with all bubbles, so we now have to deal with all of the issues that are being piled on to the deflating price of housing in the United States; such as the credit crunch, the rapid devaluation of our currency, and a general lack of confidence in a majority of our fellow Americans with the economy and our country as a whole. Adding all of this to the numerous other political issues that the country is currently dealing with has made things much worse than they should have been. And then all of the problems are amplified once again due to it being a general election year.

We have to understand that all of us are at fault for the current economic issues; we can then come to the conclusion that the securitization of debt is a good and powerful tool for our economy, and as such it should not be overly regulated into something much less useful.

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