A Loos Blog

I am often asked when house prices will stop falling. If I knew the answer to that question, I would be blogging from Tahiti. The best answer I can give is that house prices will recover whenever confidence returns to the market.

Confidence? What the heck does that mean Loos? Simple. I am talking about the confidence of buyers to buy, and the confidence of lenders to lend.

The home prices continue to fall because buyers have lost confidence that the home will make them money. WHAT? The home was never supposed to be an investment, right? True, but when you see home after home go into foreclosure because the value has fallen so low, it makes you think twice about buying a home.

The lending markets have suffered because of a lack of confidence in our financial institutions. Banks are companies that people like you and me invest in – we buy bank stocks because we think the bank will prosper. Do you still believe that? Well, a lot of other people feel the same.

Is there any good news?

You bet. Low priced homes have brought first time buyers into the market in huge numbers, and banks are lending lots of money. Families who never thought they would stop renting a house are moving in to their first home. Teachers, firefighters and law enforcement personnel can actually afford a home where they work. Imagine that.

Also, a lot of the 8,430 banks in the United States are doing just fine. Why do we keep bailing out the few that are failing? Good question.

So, what will it take to fix this mess?

The sub-prime loans are still out there, , , , tick, tick, tick. It will be another year or so before these loans our out of the system, but the end to this part of the mess is just around the corner.

Wall-Street and Pennsylvania-Avenue have to stop taking tax payer’s money and giving it to the banks so that the banks can give it back to the tax payers. Call me crazy (and some of you do,) but this is, well, crazy!

Now the bad news. There isn’t any. This is America folks. If history has proven anything it’s that there has not been a financial crisis, terrorist attack, war or political blunder that can we can’t handle.

What do you think?