It is not Obama’s fault that home sales are dropping, though it is his fault that they did not drop sooner. Why is it bad that the sales of home and home prices are dropping?
Yes, it eats up bank collateral and destroys individual’s home equity values. But that is exactly what happens when a bubble bursts and it is what should happen. To move forward from a financial collapse we need to clear away the debris.
Instead of propping up inflated values we need adjust to the fact that home value appreciation near 10% is not normal. What we got used to was an induced high. What we are experiencing is financial sobriety.
We are seeing that even our huge national government cannot keep a fake market alive forever.
We should instead create a market where housing has to compete fairly with other investment alternatives without the subsidies, tax breaks, and political meddling.
Housing will not drop to zero. At some point they will reach a point where the industry will recover. For every dollar one person loses on a home another will gain. For a president so keen on redistribution this should be welcomed.