I read an interesting article on the Business Spectator website at the weekend. The full article is written by Steven F Landsburg

Steven’s article presents an interesting perspective on the doom and gloom surrounding the impending crash of US house prices and the subsequent mortgage foreclosures and argues as to why they should be allowed to happen. On the positive this article does provide those of you with children destined to never own their own home – or so you thought, hope for the future.

While the article goes into more detail than I will cover here, a valid point is made that while it is not nice to see a person lose their home – particularly where you know that person, it is important to remember that the physical asset – the home is never lost, but is effectively resold on to a new owner (or investor) at a lower price. This new owner may have been a person who previously was excluded from the property market, but now is able to enter the market and fulfill their own personal dreams.

He also argues in a rather Shakespearean way along the lines of better to have loved and lost, than to never have loved by saying that if you are one of the people who has been able to live in a nice home for a few years and then lost it to foreclosure, you are not worse off than someone who never got to live in a nice home in the first place.

Not sure if I agree with that, but I suggest reading the article for an interesting perspective on what has been a largely doom and gloom view of what is going to happen to the US housing market, and if it happens there, maybe it could happen here –after all today’s financial press were covering stories about auction clearance rates being greatly lower over the past weekend compared to the same weekend last year.

His final point in suggesting that foreclosure is not a completely bad thing for the economy as a whole is that if there is government intervention to prevent banks from foreclosing on bad loans, then banks will undoubtedly be more reluctant to make loans in the future. What this will mean is that all those young couples out there with good savings records and prospects will find it harder to get a loan next year and that houses won’t sell and the prices will fall further, hurting the economy even more.

A bit of short term pain for longer term gain perhaps….

Does this offer hope to those who thought they could never enter the market?

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