All civilization has from time to time become a thin crust over a volcano of revolution.

- Havelock Ellis

Good News! Housing Prices to Drop!

The Federal Reserve has endorsed some rules that will change lending practices. Amongst the new rules:

- Barring lenders from loaning money when there is no proof of income.
- Prohibiting lending that does not consider ones ability to pay.
- Ensuring borrowers set aside funds to pay property taxes and insurance.

Sure, it may seem like this will keep some of that fun, crazy money out of the market that so fueled the housing/flip bubble, but lenders will find a way around it eventually--they always do. The good news is that while lenders are make only qualified loans, housing prices will have to drop. Fewer borrowers and qualifying for less money will drive down the price of housing.

Alas, no need to worry about lending practices touching reality yet; this is just a proposal. (BTW: Countrywide is still offering easy money!)

Bubbles always burst. Always.

posted at 09:24:48 on 12/18/07 by clearpolitics - Category: Economics - [Permalink]

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