Everyone wants home prices to start going up. Or at least stop going down. (Has anyone tried prayer? Don't laugh, it might work.)
Between a quarter and a fifth of homes in the U.S. are worth less than their underlying mortgages. They're not worth what their owners, many of whom have lost their jobs, paid for them. If they were priced properly now – lower – they could be sold. But banks don't want to take the loss, nor do owners. The government is trying, in well meaning fashion, to keep owners in their homes with programs meant to prop up mortgages and make payments more "affordable."
Putting off the inevitable only prolongs the pain. A healthier course would be for owners, lenders and the government to throw in the towel. Let prices fall to where someone with more money or less debt than you will buy your house. Those who give up their unaffordable houses can buy smaller ones. Or rent. Once existing housing is re-priced, homebuilders can figure out what buyers of brand new houses are prepared to spend. Carpenters and plumbers can return to the job. The economy will start looking up.
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