Tuesday, September 21, 2010

The Recession and the Housing Drag

An interesting op-ed piece in the Wall Street Journal by the editor of U.S. News & World Report. An economy is more efficient and grows faster when workers can migrate easily to better jobs. But until housing prices hit a trough migration will not be easy.

The more the government tries to prevent prices from finding an equilibrium, the longer it will take for the economy to begin growing again.

By MORTIMER ZUCKERMAN Opinion Wall Street Journal SEPTEMBER 21, 2010

A decent house has long been a symbol of middle-class American family life. Practically, it has been a secure shelter for the children and provided access to a good public education. And financially, it has been regarded as a safe store of value, a shield against the vagaries of the economy and a long-term retirement asset.

All that seems a distant memory for the millions of American families who must confront the decline in the value of their homes. The pressure to meet mortgage payments on properties that have lost value has been especially shocking for those who have lost their jobs in the Great Recession. Their houses have become a ball and chain, restricting their ability to seek employment elsewhere. They cannot afford to abandon the remaining equity they have in their houses—and they can't sell in this miserable market.

See the rest at http://online.wsj.com/article/SB10001424052748703989304575503752698078816.html?mod=ITP_opinion_0

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