Housing slump

If any good can be taken from Washington’s failed efforts to turn around the housing slump, it’s this: At some point 10 or 20 years from now, economists will have a wealth of data that will show how government interference distorts the market, drags out corrections and delays recovery.

“The problem is just so huge in magnitude that there’s no viable solution that can come out of the government to solve it,” said Anthony Sanders, a finance professor at George Mason University.

On Friday, the Commerce Department reported that the number of new home sales in August didn’t change from July, matching the second-lowest level since 1963. The median price of new homes is at its lowest level in six years.

Meanwhile, the Treasury Department reported Wednesday that the Obama administration’s signature mortgage-relief and foreclosure-prevention initiative isn’t making a dent in either of its objectives. More than half of the people who enrolled in the program had dropped out as of August. For the vast majority of Americans, it is a complete waste of time. It is political cover for Congress and banks. It is false hope.

“There is no upside momentum in housing, period,” said Eric Green, aneconomist at TD Securities Inc. “Unemployment is so high, consumer confidence is so low, household wealth is eroded and the psychology remains negative.”

But politicians, ever concerned with appearing busy when voters are suffering, keep ripping the scabs from our gaping economic wounds and sticking their hands inside.

It makes no sense for anyone to stay in their homes when they’re out of work and they owe $100,000 more than their property is worth. Why would a bank modify a loan when the homeowner has no ability to repay even the most favorable terms? The country needs jobs, not more housing welfare. There isn’t enough money in this country to make the housing slump go away.

Leave it alone, already. It’s going to hurt like hell, but at least it will heal faster.