Critique "Is the housing market really recovering?"

Nick Fainlight

Blog Critique

            In response to the posted blog about the article, Is the real estate market really recovering?, I would agree with the author that the market is on the rise back to it’s previous point but this is not a given outcome.  The low interest rates are making people want to purchase a home more, especially because the housing market has not looked this good since the early 2000’s so many people have been looking on the market for a long time.  I again agree with Griffin that as this demand continues to stay high, we will see the supply continuously decrease and the prices slowly rise.  This could lead us back to a problem, as the banks might be helping people out by working the deals out to allow people to sell their houses rather than be foreclosed on.  However, at what point does this become the bank shooting itself in the foot?  I understand that these banks would be spending more money on foreclosing someone than letting them pay off their loan, but with the low interest rates I do not see this money really making that big of a difference, especially when the bank can take that lot and flip it for a profit more times than not.  As for the point about Arizona and California being the two most popular destinations currently, that is because the “baby boomer” generation is now beginning to retire and see somewhere they can relax.  And, as a matter of fact, California and Arizona are two of the most popular destinations for older folks trying to find a place to settle down for their old age years.  This is also a factor driving up the demand for housing, because that generation now has children who are moving out or going on to college so many parents will begin leaving their family homes and will choose to move towards a more suitable region.  Another problem here is that the “baby boomers” will be looking for these homes, their children will be looking for homes/apartments near their new jobs and other demand will stay constant as people are still struggling from the recent economic downturn.  I feel like this market is shaping up and looking better each quarter, but the housing market can definitely not be considered fixed because the interest rates are making it too easy to borrow money which could lead us back to the subprime mortgage problem I mentioned earlier.  I guess we will see how this all works out, but I feel that there must be some intervention made to keep the demand and supply growing, but to also put more pressure on the individuals to pay the mortgages themselves rather than paying it over the course of dozens of years.