The Housing Market Bubble

As it the case with every market the government attempts to turn into a constant boom with the housing market ended up being a complete bust. Case in point, look at the number of vacant homes in Minneapolis. That’s a ton of homes sitting empty and it’s only one city.

I remember when the housing market was in its boom phase and everybody claimed there was no way to lose money on a home. People made a business out of buying a home, sprucing it up, and selling it for a profit. The problem is this boom created a ton of home, more homes that the market demanded. Supply and demand is a very real phenomenon and when the supply exceeds demand the cost of that supply goes down. The more the supply exceeds the demand the more the price of that supply plummets.

It’s such a simple concept that I’m at a loss to understand how our government doesn’t understand it. By pushing banks to make more home loans and guaranteeing these loans even to people who’s ability to pay was unquestionable not there the government helped create this massive failure in the housing market. On the upside if you’re looking for a home you can pick one up cheap. Then again you could also wait for the price to go down even more as it’s going to continue doing for a while.