"I think this economy is down because we built too many houses"

[happy_liberal]

Who said this?

Of course this was our former pResident George W who came up with that interesting analysis. At the time I remember everyone :rofl: at the stupidity.


Well I cannot believe what I just read...

"Overbuilding in the boom years that preceded the economic recession has resulted in too many houses available for the level of demand, the president said.

"It is going to take time to absorb this inventory that is just too high," Obama said. "There's no quick way to do it."

WHO said this? President Obama.

I guess I am small minded because I thought the problem was that people have no jobs and therefore no money so they have been kicked out of their homes. I guess he is talking chess and I am thinking checkers because it is so bizarre I am lost.

Why don't you tell the millions of newly created homeless that the real problem with the economy is too many houses.

Are these people really that out of touch? :grr:

[Schema Thing]

1. If you can't understand the reality of what Obama is saying

you're playing with your navel.


Are you really that out of touch?

[happy_liberal]

11. good one!

I just have the feeling that if jobs and money were available(perhaps more government created and subsidized low income housing)...millions of currently homeless Americans, many of them children, would rather live in homes.

[monmouth]

2. Speculators built and built homes/communities down here (Florida)

thinking buyers were waiting in line. Most of those homes have never been lived in and are just rotting away. Same with the condos here in downtown West Palm Beach. I don't think they're even half occupied..

[louis-t]

12. Speculators also BOUGHT and BOUGHT.

Pre-builds were all the rage for investors. There was a window in time where the value would be up to $100,000 higher by the time it was built. The investor would then flip the property.

[AnArmyVeteran]

16. Flip this House is a HGTV program showing how to resell houses.

People bought houses, put a few thousand in renovations to them and then resold often within a few months and they made hundreds of thousands of dollars. It was like a house ponzi scheme, but the last ones to try to flip them must have been hit very hard.

[louis-t]

24. Flip This House shows small businessmen and women

who make a living buying and selling houses. Nothing wrong with that. They work very hard. The houses they buy are very often in horrible shape and are a detriment to the neighborhood. When they rehab the house, it improves home values in the area. The speculators in FL, AZ, NV, CA and other hot areas sat on their asses and moved money around. They contributed nothing but greed. I have no sympathy for a greedy speculator who lost his ass on a project. I have never seen any of the companies on Flip This House make "hundreds of thousands" on one property. They are selling to people who will live in the home and cannot overvalue the homes because the buyers are getting mortgages and must appraise. They are keeping contractors working, contributing to local economies, and improving neighborhoods. BIG difference.

[AnArmyVeteran]

27. I don't like speculators either.

When I said hundreds of thousands I meant that the house flippers sold house after house and made huge profits off of each one. They could make hundreds of thousands in one year.

As for speculators, screw them. I'm glad they took a hit. I'd personally love to see a war on greed. Greed is what caused our economy to collapse.

[louis-t]

32. They make profits, but they also take risks.

AND they're improving something instead of just sucking money out of it. How many times have you seen them run into hidden problems or cost overruns? Especially in areas with termites, etc. where the damage can go undetected until they start opening walls.

[blindpig]

3. Capitalist overproduction...

they can't help it. It is why we are doomed to one bubble after another.

Really only one way to fix that....

[izquierdista]

8. Don't forget the other half

Where the excesses of capitalist production sit around unused because in the bust phase no one has any capital to buy things.

[NeedleCast]

4. I don't think it has a whole lot to do with the total economic picture

but to some extent, it's true.

No or low new home/business construction means a lot less decently paying construction jobs.

Which part of what Obama said do you think is incorrect? Or are you of the opinion that it's automatically incorrect because Bush said it?

[happy_liberal]

13. the part where millions of Americans were foreclosed on because they had no jobs to make payments

I don't think the majority of people's economic woes are based on the fact that there are too many houses. They need jobs. People want to live in homes, they do not have the ability to pay for them.

If there are so many homes, prices should be dropping to rock bottom where the government could easily scoop them up to create low income housing for all the people who have been foreclosed on because they have no jobs.

This is the government that created the problem(see NAFTA/WTO) and THIS is their analysis of the situation?

If we got all the homeless people into homes...and the families that have moved back in with parents into homes....would there still be too many houses?

[pitohui]

21. prices HAVE dropped to rock bottom

you can buy an entire house for back taxes in detroit for $4K, you can buy a condo in vegas for $40K
i don't know how much more "rock" you can get than that

would you live w. your parents (if you had kids) or would you really move into section 8 housing and expose your kids to that kind of school district and that kind of environment?

i'm skeptical that the gov't creating more slums is going to be v. helpful frankly

now if the gov't would knock down some of the housing that really can't be fixed at reasonable cost...that would be a start

but more slum housing and more slum landlords i'm not real in favor of that

[happy_liberal]

25. let's bring low income housing out of the slums

There are houses available everywhere, we don't have to lump all low income housing together creating some awful neighborhood. Jobs can be created converting McMansions into duplexes etc.

There are millions of Americans with no homes, in desperate need of low income housing. These are people from all walks of life, many of them broke due to medical expenses. There is no reason that helping people into homes has to turn it into slums. And maybe there is a way around slum landlords.

There are millions of homes empty...millions of Americans homeless...there must be a better way.

[truedelphi]

5. Obama also came out in March and April of 2009 and

"Confessed" that he never did take time to understand the economy, as he was too busy while running for the Presidency to do that. He had the two wars to try and spend time on. (I guess that in this era of mindlessness, every President needs to feel that he appears as just an "average" Joe who would be a good guy to have a beer with.)

Of course, for those of us who remember him giving rather spot on analysis of the economy while he was running, this only made us think that:

1) the man was abducted by aliens, who substituted a look alike for him

or
2) he lies.

[SammyWinstonJack]

10. he lies, works for me.

x(

[Lost4words]

6. I think they believe the public to be less than intelligent

and we wont connect the dots. This administration is either totally out of touch or they are just plain criminal.

[KansDem]

7. On a similar note...

What happens to the housing industry when the Boomers start retiring and wanting to downsize?

What happens when there are more sellers than buyers? Who's going to buy all those 3 to 4-bedroom, 2 to 3-bath houses that Boomers worked up to? Especially with wages stagnant or dropping and high un-/under-employment? Is your $12.50 an hour auto worker (working alongside the $25 an hour union autoworker) going to be able to afford one?

Overbuilding in the boom years that preceded the economic recession has resulted in too many houses available for the level of demand
Just wait until Boomers start selling to move into their condos or assisted-living spaces, and there are too many sellers than buyers.

[Hawkowl]

9. Business cycle vs. structural recession

Your remarks are very telling. Obama is buying into the Republican/corporatist wishful thinking that this depression is the result of a massive inventory imbalance financed by easy credit (i.e; housing boom brought on buy easy mortgages brokered by criminals).

This argument says that once the inventory is depleted, the economy will get back to normal.

This is what Krugman, Stiglitz, Reich and others vehemently disagree with. It is obvious that yes, there is an overabundance of housing inventory, but this is an effect, not a cause of the depression. The problem is structural, as you suggest, meaning the economy is not producing enough and there aren't enough well paying jobs. Until the economy is retooled into producing goods and services that people want and need, the inventory will not be corrected. Indeed it will get worse.

Obama doesn't understand the fundamental economic principles because he has surrounded himself with group think, supply side, free trade DLC, Chicago school monetarists who are responsible for generating this depression.

This is why the depression will intensify and continue.

[happy_liberal]

15. there is an overabundance of housing inventory, but this is an effect, not a cause of the depression

Thank you. You should have written the OP :rofl: (this is me laughing at myself at how much better you put it)

Your comment says it all!

[county worker]

26. I disagree with you. The over abundance of housing was intentional.

Loans were made to people who could not afford to repay them. Houses had to be built in order for there to be a need for the sub prime loan. The loans were made to buyers and the paper sold to a second party. The selling of the loans made more money available and more houses were built to keep the game going. The groups of loans were packaged together and sold as securities. The securities were sold. Everyone in the chain was making money.

Buyers began to default. The securities based on sub prime loans were worthless. Banks had worthless assets and stopped loaning. This dried up capital and the economy stated to collapse. People lost jobs and lost houses. Consumer spending dried up.

All the while the houses existed and their existence was part of the plan which created the bubble. The sub prime loan scam caused the recession as the bubble burst. People got loans they could not repay thus the paper was worthless and at some point along the chain that fact becomes evident. That happened before the layoffs.

On edit: There are several books out now that describe this in great detail, much better than I can.

[happy_liberal]

29. People lost jobs because they went overseas

"People got loans they could not repay...That happened before the layoffs."

Which came first?

People would probably still happily pay their over inflated mortgage if they could.

[county worker]

33. They never could pay the loan even from day one.

There are houses that people lived in and no payments were ever made. In others the payments were interest only and in others there were low payments in the beginning but the were scheduled to be reset. Even if people could make the payments at first when they reset they could no longer make the payment.

The very large employment percentage we have now can be traced back to the easing of the rules for lending on mortgages.

[happy_liberal]

31. I agree this was an intentional scam

This worked out really well for them.

[county worker]

35. So well that when they began to lose money they were bailed out.

The ones hurt are the working class people who did not understand what was going on. Even if we could some how go back and tell people that they are making a mistake signing on the dotted line they would not believe us.

The question I keep asking is why did people sign for loans they could not repay. I've gotten several answers including the idea that people thought they could sell the house for more than they paid in a very short time and make money presumably to put into a bigger house. I've heard that people were lied to or were misled and they did not know how much the payments would be. But still in the back of my mind I have the thought that some people must have signed up for more of a payment than they could afford because they just did not have enough on the ball to figure that out.

Back then were were buying the biggest truck or suv we could and the biggest house we could all to prove we have made it to the American Dream.

There was a song when I was a kid that said, "You can get everything you seek for a dollar down and a dollar a week." Cedit was king, debt level didn't matter.

In stead of lenders enforcing rules that prevented you from getting into trouble, they did not enforce the rules because they wanted you to get into trouble. They sold the loan and made their profit so it was no skin off their noses.

[Common Sense Party]

14. That's part of what caused the massive bubble.

[Bragi]

17. Buy Tulips! Can't Lose! /nt

[pitohui]

18. sorry, but facts is facts, real estate collapsed because of overbuilding

go to phoenix and vegas to see easy examples of what i'm talking about

you can't build a fucking condo for everybody in america and think everybody in america can afford to buy two, three or more houses/condos, it was destined to collapse, and because of this overbuilding it won't come back for years

the main reason new orleans saw little problems from the recession is because 80% of housing stock was flooded, and we've been re-building places as people need them, instead of just some developer is allowed to keep cutting down trees or (whatever they cut down in deserts, i guess tumbleweeds) to keep building and building and building

how can your house be worth anything when thousands upon thousands of them are standing empty, unable to be sold for any price?

maybe every house on YOUR street is occupied, nice for you, prob. means you live in one of two states that weren't hit by the ridiculous overbuilding -- louisiana and texas

there are quite a few other states and in some of them there are mile after mile of empty housing, and not just out west

detroit, michigan is the famous example, you can buy a house for $4K except you won't because there's no jobs there

i don't know if squatting is allowed in nevada, but it doesn't take a rocket scientist to find out that there's lots of housing stock standing empty there...every time i visit somebody is trying to sell me his house or condo

[Yavin4]

19. Property Was Bought and Flipped In Places Like FLA Before Construction Even Began

That's how crazy the bubble was.

[county worker]

20. The large number of homes were built because credit was granted to almost anyone.

We eventually had "liar loans" were people did not have to prove they had the ability to repay the loan. The industry from builder to investor made money off the sub prime loan market. As long as property values continued to increase the houses would continue to be built. There were short term fortunes being made. It was a house of cards. Now those houses are empty because there are not enough people who can make payments on them even at reduced prices. Also lenders who hold the paper are keeping houses off the market. It called the shadow inventory.

I am buying a 5 year old house in a new development. Several houses on the block are empty. Two or three more are in foreclosure and soon will be empty. Many are for sale. All were bought in 2005 at prices $200,000 or $300,000 higher than the market value today.

[Renew Deal]

22. Interest rates were intentionally kept low. This made a ton of money available.

And real estate is where everyone put it. Homes were being sold for inflated prices because "it always goes up." The return on real estate was huge. So homes were built like crazy. People went to work building these homes. It brought down the value of homes in general and people started losing money. Jobs were lost in certain industries. Money that was being borrowed didn't actually exist and then it was being insured with even more money that didn't exist and the entire thing collapsed. So there is truth to what Obama is said.

[On the Road]

23. Saying the Recession is Due to a Lack of Jobs

is kind of tautological. What caused there to be fewer jobs? Overbuilding had a lot to do with triggering the recession. A lot of employment was in housing and associated industries. Also, dropping home prices led directly to less spending and fewer jobs in many non-housing industries.

Most booms lead to busts. That's why the Fed should be attempting to maintain steady growth rather than maximize growth -- the proverbial "taking away the punchbowl just when the party is getting good." Instead, the Fed gave in to the euphoria and didn't slow things down until it was too late.

If I were Obama, I would have also also mentioned speculation as a trigger for the recession and tight credit as a reason for its continuing. But I don't disagree with his statement as a shorthand for a much more complicated process.

[MadMaddie]

28. We have an abundance and glut of new empty houses

and building space on the Eastside of Seattle. Believe it or not the builders are building again. It makes no sense, hardly anyone can get a loan to purchase a home.

Other cities are razing whole neighborhoods that stand empty...

Yes, President Obama is correct.

[happy_liberal]

36. hardly anyone can get a loan to purchase a home

that is the problem, not that there are too many homes.

There are millions of homeless people that do not feel there are too many homes.

Many people lost their jobs and their homes were forclosed on.

The solution is to get people in these homes.

The government can easily have a 'little people' bailout where they spend 100 billion buying houses on the auction block, hiring workers to fix them up, separate into duplexes etc., then these homes can be rented to Americans at super low montly rents.

There are people right now living on disability that cannot afford to live in a home. There is a huge waiting list for low income housing. Look at this story that was ignored:

62 people injured applying for low income housing
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x8955696

"The housing crisis has become so severe in this country that earlier this week, as Megan Cottrell wrote, a "mob scene" broke out and 62 people were injured when triple the expected number of applicants showed up to apply for government-subsidized housing in an Atlanta suburb.

The East Point Housing Authority severely underestimated the number of people who would come to a local shopping center on Wednesday to obtain Section 8 applications, which, for some lucky individuals, will eventually lead to obtaining affordable housing vouchers. In all, some 30,000 people showed up — an astounding three-quarters of the town's population. Some people waited in line for as long as two days.

Confusion and frustration, combined with the Georgia summer heat, eventually took its toll on the crowd, and things turned ugly. Some people collapsed in the heat, while others rushed the building that housed the applications. As chaos started to take hold, adults and children began getting trampled. One baby went into a seizure. By the time the police got control of the situation, 20 people needed to be transferred to the hospital for medical care.

You can almost smell the desperation of those East Point residents, can't you? They were desperate for a reason: Section 8 currently accommodates about 15,000 people in the entire state of Georgia — and at least 30,000 people are in need of housing assistance in East Point alone. Thousands upon thousands of additional Georgians are on housing wait lists, but the majority of the lists in the Atlanta area have been closed for months, or in some cases years, due to the increase in demand for affordable housing that has come along with the Great Recession.

[Saphire]

30. 300 homes a week in San Antonio...for a few years.

I was just laid off from a company that installed garage doors for new homes in San Antonio. We were not the largest company by any means, but that's how many we installed. Multiply that by say 3 other companys doing the same thing, and the amount is staggering. When I got laid off, we were maybe installing 6-10 per week.

I could never figure out who was buying all of them....

[damntexdem]

34. No, it's because the GOP dug too many holes, too deep.

And it's hard to crawl back out of them.