Will the government do anything about the housing slump?

Answer: If they care anything about their city, state, and federal budget, you bet their ass they will.

Being the rabid NPR listener that I am (insert joke here), I have been listening to the senators and representatives dance around the delicate issue of the housing slump and the potential for the government to get involved. Bailing people out is not a something the government should be doing but what I find extremely interesting is that no one, and I mean no one is talking about how housing foreclosures is affecting the local and national governments budgets.

With each home added to the sales market and even more homes being foreclosed on, the government is leaking potential budget revenue by the bucket load. Homes values are decreasing drastically which in turn allows the government to collect less money for property taxes. After 5 straight years of increasing property taxes, a lot of the current government offices, especially on the local level, are filled with people who haven't ever dealt with a short fall, so heck yes are they going to try to put something together.

I think that right now they are simply slowing down some on the legislation to appease the renters of America, which they do not collect much money from, and then will go right back into pushing a bill forward to assist on some of these loan defaults. The problem is that it doesn't really fix the problem and could put the government at a big risk of inflation. They keep saying some sort of crap about making sure that the help gets to the right people who actually need the help, but what does that mean? Does a family who makes $100k a year who bought a $350k house with 0% down on a 3 year ARM get the help or were they the wrong people. Or is there even a different kind of people than that causing this insanity in the first place?

It is really scary when you think about it, because the people pushing things forward aren't thinking clearly, they see budget cuts and think, "crap, I can't afford for our budget to get smaller, I promised this, this, and this." Reality though, and I hope it wins out, is that the market needs to adjust for itself. The banks screwed up, the public screwed up, and now the government needs to stay out. The governments are going to hurt for a couple of years, but ultimately a market should be able to adjust for itself.

Here is the other problem, if government steps in and gets banks to accept homes at 75% of their current value for defaulting home owners (one proposal out there from the government), how is that fair to the home owners not missing payments?

I apologize ahead of time for this post being messy, but it is late and well that's my excuse.

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