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How does a 2 bedroom expansion in ST. Louis Park effect the price of a 30 room mansion on Lake Mtka? What an over-generalized piece of pablum spewed by the professor!. Simalr housing in simlar neighborhoods are very inter-related, and so is the next step up in those same areas, but the houses in a higher bracket in abetter neighborhood are unaffected. What effects them is the recession and uncertainty, not the foreclosures. It is probable the values of high end stuff are unrelated to the low end housing market, simply because one is dependent on people needing something and the other on people coveting something. Bill G.
I hope people realize that housing prices will never be as high as they were before the bubble burst. Those prices were severely inflated. A house is not an investment--it is a place to live. As long as congress doesn't pressure banks to make loans they should not (by saying Fannie and Freddie will buy all of the loans!), then housing prices will fall back in line with inflation.
should never have been given directly to the lenders. It should have passed through the borrowers to the lenders. Then the borrowers would have seen the benefit as well and the economy would have stabilized because their loans would have been caught up and they would have stayed in their homes. Instead we expect the lenders to lend on devalued homes while carrying worthless paper on the same properties.
Usually Karvel is pretty accurate, but I think he misses the point that most of these foreclosures happened because the houses are in terrible shape. People that I know who have sopped or bought a foreclosure have found they have to put a lot of money into the place vefore they can even move in. If you start looking at middle of the market single family homes in Eagan or Woodbury and you will find that prices are down from the peak, but no tremendous bargains.
I think what most people do not realize is the initial burst in the housing market bubble was not caused by people losing their jobs, but was caused by over inflated prices, programs that required no income or asset verification based completely on credit scores, with no care to given to whether or not the claims of income & or assets was legitimate, & the desire of some people to want more home then they could afford. Go to any area in the country, inter city to upsacle suburbs & you will find foreclosed properties. Added to that is now people are losing their homes because they are losing jobs, medical benefits, etc. It will take a while for housing to recover, but prices will never be where they were whne the whole thing started.
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