Our politicians keep pushing for a recovery; like we can return to something that wasn’t really real anyway.

True, I still see Johnny-come-lately “investors” getting soaked in CA. Lots of reallllllly good lenders out there willing to put Johnny into any kind loan he/she wants.

Here in Las Vegas, believe it or not, first-time buyers are still coming out of the woodwork, like it’s some kind of dream to own a tile roofed tract home in the desert. In my own family it’s happening. What can I say, “Oh, isn’t that nice”….the typical southern belle reply that really means, idiot, or something worse.

No, housing will stop this free-fall when a buyer puts 20% down on a sale price no more than 3x their annual income, and their payment is no more than 40% of their monthly income.

Hi: I read your article on Citi and mortgage modification. However, I don’t think you understand its legal ramifications. May I step back a few steps and suggest a few questions you might want to ask Schumer? Ever since West Coast Hotel v. Parrish (1937–John Roberts had to sign off on its doctrine IN WRITING: it’s online), the Constitutional regime has been as follows: policy is Constitutional if it is rationally related to a legitimate government purpose. Thus, with a few exceptions (noted below) policy is subject only to “minimum scrutiny.” That is why the current Constitutional regime is called the scrutiny regime. This has meant two things: 1. the political system has nearly absolute control over nearly all facts;2. individuals have virtually no individually enforceable rights over any facts. That is true of housing. The reason homeowners can get foreclosed is because they cannot assert any right against current policy which says: if you can’t pay your mortgage, you get foreclosed. Housing enjoys only minimum scrutiny, as the Court found in Lindsey v. Normet (all these cases listed here are online). OK, what are the exceptions? Certain facts are taken OUT of the political system and virtually absolute power over them is given to the individual. These are known as “important” facts. What are important facts? The test, laid out in West Virginia v. Barnette, is whether a fact is a fact of human experience which does not change no matter what attempt is made to change it. What is an example of an “important” fact? Exercises of religion, which were removed from the political process in West Virginia. It is virtually impossible for government to attempt to change an exercise of religion (such attempts are subject to “strict” scrutiny–which says that government basically has to argue that the government will collapse unless it is allowed to attempt to change an exercise of religion: government never wins this argument). Protected speech is another important fact. So is racial and gender legal equality. Is housing an “important” fact? People have been arguing it for years, but the Court has never found it to be so. Now the question is, if judges can modify mortgages, are we moving toward recognizing that housing is an important fact. For example, the proposal says JUDGES can modify mortgage terms. But where does that request come from? It comes from the homeowner. So, the legislation is giving homeowners power they did not have before. Thus, the legislation RAISES THE LEVEL OF SCRUTINY for housing with respect to home mortgages. The reason you are seeing opposition is that this immediately raises other questions? Are there analogous situations with regard to rental agreements, such that renters would also have the right to ask the Court to alter housing leases? After all, Bair at FDIC doesn’t want to remove renters renting foreclosed houses. So, combining her policy with this new legislation, aren’t we saying that the level of scrutiny for housing is also being raised with respect to renters? And if the level of scrutiny for housing is being raised with respect to mortgage terms and rental agreements, with respect to what other, analogous aspects of housing-related contracts, or housing itself, or health and welfare regulation relating to housing, is the level of scrutiny being raised? So this is why what is going on in housing policy is so momentous. The stakes are high: are we leaving the “scrutiny” regime behind? I think so. You might want to read online an interesting essay about the history of our Constitutional regimes: G. Edward White (University of Virginia Law School), “Historicizing Judicial Scrutiny.” It is VERY important to note that, as individually enforceable rights with respect to facts, are increased, the political system’s control over the MONEY relating to those facts, decreases. Appropriations increasingly are tailored to harmonize with the right. The political system is worried about losing control over government expenditure. Housing is not the only fact with respect to which public opinion is demanding more individually enforceable rights. I studied this phenomenon in connection with the opposition to eminent domain in my book The Eminent Domain Revolt (New York: Algora 2006). So anyway, you should ask Senator Schumer whether the proposed legislation in any way raises the level of scrutiny fo housing, or, does it increase individually enforceable rights in housing. If they strenuously deny that it does any such thing, then ask whether it does not give the homeowner the right to request a change in mortgage terms. Cheers,John Ryskamp

His conclusions are not nearly as important as his observation about shadow inventory.

I believe that if you see a double-dip, you’ll see it in inventory, not necessarily prices, at least in the bubble states.

Still, he could be right. The psychology of seeing prices come back slightly and then recede may trigger the fight/flight mechanism in the same way that our current stock market crash is a shadow of those involved in the 99/00 bubble prolonged crash. Everybody’s got their itchy trigger finger on the sell button after what happened in 01/02/03.

The same could be said for housing. If people believe they may never again see the value of their house at 2005/2006 prices, they are willing to take what they can get.

Personally, I think Shiller underestimates just how much equity has been stripped of American homes and so that kind of psychology makes sense. However, if the rest of the US is anything like where I live (OC), people will be walking from their houses for a long time to come. There’s nothing to sell, a short sale isn’t much better than a foreclosures and it’s a whole lot more work.