Homes Sales Up in Feb.

Home sales increased in Feb. following 6 months of declines.  Obviously, people are taking advantage of lower home prices, but there is more to the story.

The bottom line is, the market works.

Home prices had soared over the past couple years to unrealistic levels.  Why?  Because the Fed Reserve’s loose money policy instituted by Alan Greenspan distorted market forces and spurred the subprime mortgage craze where people who had no business getting loans for the amounts that they were seeking did so easily.  This allowed sellers to charge higher prices since buyers had access to the funds.  It was a form of inflation pure and simple.

Now, with the collapse of the subprime mortgage market, prices have dropped back to what the market can actually bear.  The last thing we need now is the government riding to the “rescue” with a “solution” to this “crisis.”

In my own neighborhood, homes that had been on the market for months have suddenly been sold or are now under contract.  More homeowners who had been delinquent on their HOA fees have been settling up their debts.  And just yesterday I noted that Ryan Homes is now advertising “Coming Soon” to Potomac Harbor with single-family homes starting in the $500s.  Just a month ago, there was uncertainty whether any builders would be jumping in to that community before next year.

Of course, it will only be a matter of time before the government sticks its nose into things and messes things up again.  Until then, this is a buyers’ market.