Robert Samuelson: The upside of the housing bust

If you’re a 20-something or even younger, your economic future is at best clouded. Your taxes will almost certainly be higher than today’s; your public services (schools, police, sanitation, defense, scientific research) will almost certainly be lower. Paying for old people, covering rising health costs, repairing dilapidated roads and servicing government pensions and the huge federal debt will squeeze take-home pay. Is there any hope for economic gains?

Well, yes ”” and from a surprising source. Housing. Say what?…

housing’s troubles may have a silver lining. If you’re a homeowner, the steep fall in prices is calamitous. But if you’re a future buyer, it’s a godsend. What we’re seeing is a massive wealth transfer from today’s older homeowners to tomorrow’s younger homeowners.

Read it all.


Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, America/U.S.A., Economy, Housing/Real Estate Market, Young Adults

6 comments on “Robert Samuelson: The upside of the housing bust

  1. Cennydd13 says:

    What we now have here, folks, is a [i]buyer’s market![/i] As for my wife and me, however, we’re not concerned about our home’s value, since we’re retired and we’re not going anywhere. We do feel for others who are trying to sell theirs, though.

  2. Catholic Mom says:

    Well, it’s an advantage to the young (or new) home buyers in that they can get more home for less money. It’s certainly not a “wealth transfer” any more than somebody who buys Merrill Lynch at 17 when it was trading at 108 three years ago is receiving a wealth transfer from those who bought at 108 and are selling at 17 today. The difference is that you can live in a home and you can’t do much with stock — not even paper your walls these days. Other than that — it’s exactly the same. The young house buyer has not receive any transferred “wealth” when he pays $200k for a house that the old house seller originally bought for $500k. He just gets nicer digs for a lower price. But the house is still only worth $200k unless the market goes up again.

  3. Creedal Episcopalian says:

    Nobody wins anything here. Housing is still above historical pricing:
    [url=]Historical Housing Prices[/url]
    The winners will be those who avoid bankruptcy, and can keep their wages/earnings current with inflation, as the value of their debt plummets with inflation, and they sit on historically low interest rate loans.
    The kids will get screwed, as they have to buy into an average priced market with flat incomes (it’s still a brutal employer’s market) at inflationary interest.
    Of course, if the economy crashes everyone loses. What can’t go on must eventually stop.

  4. Teatime2 says:

    With the jobs market the way it is, why would any young person want to lock himself/herself into a mortgage and the expense of owning a house? There’s constant upkeep and expense, property taxes that are going to continue rising because municipalities are broke, and, with the crazy weather across the U.S., rising insurance costs, too.

    Plus, a house ties you to an area. If you’re young and don’t have much in savings and no equity, you’re stuck there until you can sell it. That means if you lose your job, you can’t relocate to find something else. If you know of a better job elsewhere, you can’t move to take it. Fat chance that companies will buy your existing home to help you out, as some used to do.

    And here we go again with “you can get more house for your money!” “More house” means higher utilities, higher taxes, more upkeep and maintenance. When will people, especially young people, simply buy what they NEED and can afford to have? Housing has corrected, high-paying jobs haven’t come back and you’re not going to make a huge profit by buying low and selling high anymore.

  5. Capt. Father Warren says:

    TT2, and I wonder, how much in college loans have those twenty-something wonders racked up to get to that very first job?

    I don’t see any big wealth transfer here; what we are seeing is the destruction of wealth. Today people have cheered because a hedge-fund fraud was convicted of major crimes.

    Really??? Nothing but peanuts compared to Fannie and Freddie!

  6. Sidney says:

    The young people who don’t own houses don’t vote. Older folks who do have equity do vote.

    My bet is on policy favoring homeowners. Expect the Fed continue inflation and prop up markets.