Thursday, February 21, 2013

More Houses? No. More factories.

What is this obsession with housing prices? Why is it good that the housing market is going up? Do we have a crisis of not enough homes? Should the emphasis be on building more houses?

No. The American economy has too many houses and those houses are too overpriced. The American economy should be creating more factories and manufacturing more products. People aren't having trouble finding a place to live, they are having trouble finding a place to work.

The reason this issue retains so much attention, even from the Obama Administration, is largely because many (voting) Americans bought a house during the housing bubble (created in part by government malinvestment). Since the bubble burst in 2007, their mortgages are "under water" because they were led by predatory lenders and irresponsible lending standards into bad bets.

Yet when asked another way, most Americans are not interested in higher housing prices to accompany their already high gas prices, medical bills, tuition costs, grocery bills, and other daily expenses that are the telltale signs of inflation (source).

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