Propping Up Housing Prices
Home prices fell in the nation’s major metropolitan areas from September to October, with six regions hitting new lows, and they’re not expected to rebound anytime soon.
The Standard & Poor’s/Case-Shiller index, long considered a reliable gauge of the housing market’s health, reported Tuesday that prices of single-family homes dropped 1.3 percent in all 20 regions it tracks.
The housing market’s collapse crippled the economy, and a recovery in home prices is considered critical to getting the market back on track. (emphasis added)
Housing prices are falling because they soared to ridiculous levels during the bubble . Any policy that attempts to keep prices high – or, equivalently, that attempts to prevent foreclosures or juice housing construction — is fighting a crucial market adjustment to past distortions.
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