Wednesday, June 20, 2007

Nothing is true until it's officially denied.

That's what I thought about Bush's watch being stolen the other week. (I'll leave it up to you to know or search about that.) This time, the Bush administration says the housing slump is kaput.

If by slump they mean that prices have been going up while buyers are more scarce, I sure hope that's over. Because nothing could make less sense. Economics says that when the demand goes down, the equilibrium price should also go down. Anything else, and there's a strong corrective pull. This "slump" means to me that a house costs a lot more to buy now than it would have 5 years ago. Something like 50% more. If it's over, I hope housing prices actually go down, and I really don't care how many houses are sold overall, but I bet it's more.

Unfortunately, if a Bush lackey says it's going to happen, it must be false. So, the "slump" will continue. But they only care about the total home sales. What that means for the price of any individual home is undetermined in this strange market. The best way to continue the slump would be to keep prices high. So much for a home being affordable to a non-DINK family.

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