Why Lower Home Prices Are The Only True Solution To The Housing Collapse

Even many economists—who should know better—describe the present situation as an oversupply of unsold homes. True, there is about 10 months’ supply of existing homes, as opposed to four months a few years ago. But the real problem is insufficient demand. There aren’t more homes than there are Americans who want homes; that would be a true surplus. There’s so much supply because many prospective customers can’t buy at today’s prices.

By definition, the “housing bubble” meant that home prices got too high. Easy credit, lax lending standards and panic buying raised them to foolish levels. Weak borrowers got loans. People with good credit borrowed too much. Speculators joined the circus.

Read “Reviving the Real Estate Market” written by Robert J. Samuelson over at NewsWeek.com