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Tuesday, September 28, 2010

What should US do about falling home prices?

Home prices fell in July in half the 20 major US markets polled by the S&P/Case Shiller survey, read it here. That's a sign of weak demand, low employment, slowing growth. ADD: More from AP here.

What should the government do at this point? Nothing, says Joel Naroff, veteran Bucks County-based bank economist.

Cheaper money won't help: Federal Reserve and home mortgage rates are already near record lows. "The problems are credit standards and a lack of equity and nothing but time and some more growth will allow households to rebuild their balance sheets and see some improvement in their home prices....

"So, I will repeat: Both the government and the Fed should step aside and allow the economy to heal on its own... Tax cuts, government spending and quantitative easing will only create more problems down the road and do little in the short run...

"The recovery may be sluggish but it is working its way through the economy and by next summer, we should be moving along just fine."
Posted by Joseph N. DiStefano @ 1:28 PM  Permalink | Post a comment
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About Joseph N. DiStefano
Joseph N. DiStefano writes this blog to feed his PhillyDeals column in the Philadelphia Inquirer. Joe has been a member of Bloomberg LP’s New York Finance Team, wrote the book “Comcasted,” taught writing at St. Joseph’s University, and studied economics and history at Penn. Reach Joe at 215-854-5194 and JoeD@phillynews.com
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