Comments on: AEI Subprime VI: Lachman Presentation http://housingdoom.com/2009/11/02/aei-subprime-vi-lachman-presentation/ "He who defends everything defends nothing." - Frederick the Great Fri, 19 Mar 2010 07:04:43 +0000 http://wordpress.org/?v=2.9.1 hourly 1 By: malthus http://housingdoom.com/2009/11/02/aei-subprime-vi-lachman-presentation/comment-page-1/#comment-21110 malthus Tue, 03 Nov 2009 12:43:56 +0000 http://housingdoom.com/?p=5135#comment-21110 "[T]he chart that bothers me is the state of the labor market. It’s not simply a question that you’ve got unemployment at 9.8 percent, but as Nouriel mentioned, if you include part-time workers, the number goes up to something like 16 3/4 percent, which just means that you’ve got a lot of job insecurity. That’s why you’re not seeing the affordability converting into sales." How do you avoid the conclusion that this is a race to the bottom? If income continues its free fall, the price of housing will have to decline that much faster to clear the market of vacant units. So, if it is true that "housing and the economy are joined at the hip," we are about to experience a gut-wrenching toboggan ride. “[T]he chart that bothers me is the state of the labor market. It’s not simply a question that you’ve got unemployment at 9.8 percent, but as Nouriel mentioned, if you include part-time workers, the number goes up to something like 16 3/4 percent, which just means that you’ve got a lot of job insecurity. That’s why you’re not seeing the affordability converting into sales.”

How do you avoid the conclusion that this is a race to the bottom? If income continues its free fall, the price of housing will have to decline that much faster to clear the market of vacant units.

So, if it is true that “housing and the economy are joined at the hip,” we are about to experience a gut-wrenching toboggan ride.

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