Hands Off, Obama: Let Housing Prices Fall

False incentives will hurt us in the long run
By John Johnson,  Newser Staff
Posted Aug 28, 2010 1:07 PM CDT
A file photo of a foreclosed home in Denver.   (AP Photo/David Zalubowski, file)

(Newser) – In case you missed it, be advised that home sales have fallen off a cliff. This week's grim numbers will no doubt raise the call for the Obama administration to reach into its bag of tricks (bring back that tax credit, maybe?) to encourage people to buy and thus keep prices from falling further. Here's hoping the government does no such thing, writes Tom Petruno in the Los Angeles Times.

There's only one "fair" solution to this mess: "Leave housing to market forces, let prices fall until buyers are motivated to come in, and hope that the economy can stand one final cathartic wave to clear the excesses of the bubble," he writes. This economic tough love "could force the banking system, and the government, to finally deal realistically with a root cause of the economy's woes: the gigantic debt load consumers took on over the last two decades."

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