There are many examples that prove why government should not be involved in the economy, but surely the housing market bubble bursting is one of the finest. This WSJ article is interesting, and scary!
To examine the eye-popping dimensions of the housing bust, New York Federal Reserve Bank economists calculate the fraction of families who actually have equity in the house they own. In San Diego, for instance, the home ownership rate had fallen to 55% last year from a peak of 63%. But by late last year, the fraction of households with equity in their homes was between 35% and 39%. In hard-hit Las Vegas, nearly 59% of households own their homes, but only 15% to 19% of households own a home in which they have any equity left.
For many, the American dream of home ownership turned into a nightmare of debt and foreclosure. Some people should rent.
Yes, the government can change (and ruin) our idea of the American Dream, but we are allowing them to get away with it.
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