Government Thinks It Knows Better How Much Real Estate Should Be Valued

There are endless calls for the government to intervene to shore up real estate values. There are also demands for the government to create affordable housing. Aren't these goals in conflict? Why not just leave it to the free market?

But no.

Here's a column asking the government to stop the bleeding. Stop the foreclosures. Intervene.

Foreclosures lower real estate values which lead to more foreclosures.

Here's more:

J.P. Morgan Chase, the nation’s largest bank, last week and Citigroup this week announced plans to work out easier payments for homeowners. That’s about 2 million homeowners, when combined with Bank America and Countrywide’s programs.

And Tuesday, the government’s mortgage giants, Freddie Mac and Fannie Mae, announced similar programs.

This is good news for Atlanta, dependent as we are on the housing industry.

“The ability for housing to post a recovery in ‘09 depends on reducing our inventory,” said Mercer University economist Roger Tutterow.

And foreclosures add to that inventory. And an oversupply results in falling prices.

While Atlanta avoided the ridiculous run-up in home prices that is now killing California and Florida, Georgia ranked sixth in the country in foreclosure notices in August. We’ve also seen prices fall about 8 percent in the last year.

Builders have about stopped building — not everywhere, but in general. That’s good in a perverse sense: they aren’t adding to inventory.

If these new programs can prevent preventable foreclosures that will keep more homes off the market.

“Atlanta is still blessed,” Tutterow said. “Our prices haven’t dropped nearly as much as some places,” and people (new buyers) still want to move here.