As a mother of two, I can find parallels between the housing mess and parenting. It’s fun to let the kids stay up late, make a mess, and have a good time. But the price is paid the next day. If the party goes on too long, someone is bound to get hurt.
That’s what happened in the mortgage market. Rising home prices disguised bad decisions by borrowers and lenders. But everyone seemed to be having a good time, getting a home of their dreams or a hefty bonus. Seems to me the regulators are like the mothers who let the party go on too long. Unfortunately, a lot of people are getting hurt by the lax approach that took hold when everyone was having fun.
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The National Association of Realtors has an affordability index it publishes monthly. The association says the index measures whether or not a typical family could qualify for a mortgage loan on a typical home.
You can check it out at http://www.realtor.org/Research.nsf/Pages/HousingInx
we have market indexes such as the DOW that will indicate then the market is getting over priced and when there has been a suitable correction. but there does not appear to be any such index for housing prices. how do we know when prices have have come back into line?
I like the analogy. One thing is certain, human nature will persist. Housing is only the latest. We've had Computer Tech, Biotech, Junk Bonds, Tulips, South Sea, and Pet Rocks. I can't wait to find out our next folly and hopefully manage to profit from it.