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Someone who just doesn't get it.

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February 12, 2009 – Comments (5)

Unbelievable.

Lockhart said that policymakers are eager to prevent a large drop in home values from their current, deflated levels.

"Just as we had a large overshooting to the upside. Is there any way to prevent going much further to the downside? That will cause tremendous harm to the U.S. economy, to the financial system and it's not necessary," he said.

Lockhart is either a buffoon or a liar if he contends that houses are at "deflated" levels now. Up 300% then down 30% does not = down. In far too many places, houses are still WAY too expensive by any historical norm, price to rent, price to income, pick your poison.

I suspect Mr. Lockhart is going to learn just how impotent he is. He can't set housing prices, no matter how much he chants "Yes, we can." With supply out of whack, more and more homedebtors defaulting on loans they never expected to have to services, and job losses, house prices will keep dropping.

Sj

 

5 Comments – Post Your Own

#1) On February 12, 2009 at 4:41 PM, TMFBent (99.81) wrote:

Here's an owner-equivalent rent graph, one of the many amazing goodies you can get at Calculated Risk.

Check it out, Mr. Lockhart, and you'll see that the usual range for price to rent is somewhere between 1 and 1.1. We're still at 1.3, and rents are now falling, too.

Let the market correct, Lockhart. There's nothing you can do to stop it.

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#2) On February 12, 2009 at 5:02 PM, IIcx (< 20) wrote:

Lockhart's comments are very general, it depends on the region and category as well as the assessed value. If the price is less then the assessed value then lack of demand could be one of the causes but there are 19 million vacant homes in the market.

Maybe they should hire a small army and tear them all down.

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#3) On February 12, 2009 at 5:04 PM, TMFBent (99.81) wrote:

Maybe they should hire a small army and tear them all down.

That's going to happen in some places, especially the farmland in California and Minnesota where big housing developments sit empty. They'll plow them under, I have no doubt.

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#4) On February 12, 2009 at 5:20 PM, TMFAleph1 (95.09) wrote:

Seth--

Good catch; this is exactly the sort of economic idiocy I expect from lawmakers, which is why I think the government's "bad bank" plan will fail.

AD

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#5) On February 12, 2009 at 5:33 PM, retailsails (95.60) wrote:

Lockhart is Dubya's buddy from prep school, the same genius who said Fan and Fred were extremely well capitalized last summer, then turned around and said "I told you so" after they were taken over...how does this guy still have a job?

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