Second housing crisis on horizon
The ”Great Recession” from which the nation still is recovering was sparked in large measure by a massive downturn in real estate markets.
President Barack Obama, Congress and the Federal Reserve responded by spending hundreds of billions of dollars on ”stimulus” programs that did little good.
News that another real estate downturn may be in progress should worry policy makers. Let us hope they do not react with more ”stimulus.”
Applications for mortgages are at a 13-year low, the Mortgage Bankers Association reported.
Since May, the number of U.S. mortgage applications has fallen 63 percent.
An entirely possible response from Washington would be to encourage lenders to loosen their requirements for mortgage borrowers. That might result in more home sales in the short run – but remember, that very government policy caused the ”sub-prime mortgage crisis” that preceded the recession.
Government tinkering with the economy seldom does any good. This time around, Washington should refrain from repeating the mistake.