More good news... until it isn't

One would think that falling housing prices might be viewed as at least a welcome silver lining in a recession or recognized as a "correction" to a hyper-inflated market to a point where "good risk" people are able to get back into the game. Not so much, homies.

The same politicians who have been talking about a need for "affordable housing" for years are now suddenly alarmed that home prices are falling. How can housing become more affordable unless prices fall?

The political meaning of "affordable housing" is housing that is made more affordable by politicians intervening to create government subsidies, rent control or other gimmicks for which politicians can take credit. Affordable housing produced by market forces provides no benefit to politicians and has no attraction for them.

In the wake of the housing debacle in California, more people are buying less expensive homes, making bigger down payments, and staying away from "creative" and risky financing (see chart above). It is amazing how fast people learn when they are not insulated from the consequences of their decisions.

Of course, in the world that the rest of us inhabit, “affordable housing” means “housing that you can actually afford”, be it a 5 bed/3 bath 2700 sq. ft. spread in Scripps Ranch, a 2 bedroom apartment in North Park or a freeway overpass. It's your call, your decision and your consequence.

The rest of the story, here from Thomas Sowell.

H/T: Carpe Diem