Housing SlumpSome very good points are made by June Fletcher about when the housing market should bottom, and the lessons we can learn from this current crisis. I entirely agree with all her comments about the economy, housing market, and especially what is written below.
As terrible as this is for people who have lost or will lose their homes, overall, this painful contraction is necessary—a counterbalance to the era of easy money and over-leveraging. When it is over, homes won't be worth as much as they were before, but their prices will be more in line with people's incomes. Loans won't be given to everyone with a pulse, but they will be available to people with good credit. The market will be back to normal.
Perhaps by then we'll have learned some lessons: Just because someone is offering to loan you money doesn't mean you should take it. Don't assume lenders and regulators will look after your interests. Before you sign a contract, read the fine print. Since neither job security nor rising equity is guaranteed, stick with fixed-rate loans. Don't live beyond your means. Pay your bills on time, and keep enough cash on hand to pay for at least six months of expenses. Think of your house primarily as shelter, not a cash machine.
Link to The Wall Street Journal