Discover and share the best of the web!
Learn more about Digg by taking the tour.
The scary new housing trend - The "Buy & Bail"
online.wsj.com — Next month, Michelle Augustine plans to walk away from her four-bedroom house in San Fransico, CA., subdivision and let the property fall in foreclosure. But before doing so, she hopes to lock in the purchase of another home nearby. "I can find the same exact house as what I live in right now for half the price." she says.
mydigga- 98 diggs
- digg it
- alapoet, on 06/12/2008, -0/+6Another sobering reminder of the screwed-up state of our housing market and lending climate.
- Stonecipher26, on 06/12/2008, -0/+2Yeah, she's in Sacramento, not San Francisco. No chance she would find the same house for half the price here in SF.
- lordewoks, on 06/12/2008, -0/+2These types of actions will only make things worse for everyone.
- jjgames, on 06/12/2008, -0/+2Lenders are cracking down on this big time. Fannie Mae is going to make it very hard for people to do this in the future.
- ironeus, on 08/01/2008, -0/+2Why not reappraise the current house based on market value? A voluntary foreclosure definitely points to a big flaw in current system.
- StingingNettle, on 06/12/2008, -0/+1Who is taking advantage of who again? These folks deserve eachother.
- Cylexis, on 06/12/2008, -0/+2the value of my house shot down over 20% in 2007 alone. i really do not blame these people.
- Y0tsuya, on 06/13/2008, -0/+1As long as housing prices keep going down, I won't complain.
- halligan00, on 07/23/2008, -0/+1The root of damn near every depression in history is due to real estate speculation. If you expand "real estate" to "natural resources" you get them all. The vast majority of real estate appreciation from 2000-2007 was either speculative value or inflation.
I'm a relatively devout libertarian. I love free markets. The market for real estate (and natural resources) is not a free one. It can't be made into a free market by any amount of regulation or deregulation. It simply does not work like a market for goods or services. No price rise will spur production. There is no producer. The supply of land, crude oil, minerals, air, water, etc. is absolutely fixed. An increase in demand increases prices, but not total supply. An increase in demand benefits current "owners", however there is no feedback loop for prices.
This means that an increase in real estate (land) prices is not likely to 'correct itself' without an external disaster. In fact, it will spur further increases in price: Seller A sells for $1,000,000. Later Seller B sells a similar property for $1,200,000. Seller C now thinks he can get at least 1,200,001. Couple this with a rapid growth in the supply and availability of credit money..... and you have the disaster we're in.
This has been known since at least 1879 when Henry George wrote _Progress and Poverty_.
http://en.wikipedia.org/wiki/Progress_and_Poverty
The Digg Toolbar for Firefox lets you Digg, submit content, and keep track of Digg even when you're not on the Digg site. Download the official 
© Digg Inc. 2008 —
Content posted by