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We had an interesting discussion here in Survival last week that led to this story today on some implications of the mortgage rescue plans being discussed around the country right now.

I heard last night from reader CG, who said he thinks housing prices are still “ridiculously high.” He describes a hypothetical scenario: If someone bought a house for $200,000, saw its value ascend to $1 million during the boom, and has seen its value (according to comparable sales) fall to $600,000 now, CG wonders whether the government should “intervene to level the market price at $600,000.”

How many home owners are taking actual losses in San Diego? … Just because a house goes into foreclosure does not mean it is no longer overvalued. …

I think the real story is that banks, and home owners are waiting to see the government stabilize prices at a high point, or even see the market get back to the skyrocketing numbers.  They are hoping to get from the government what they can no longer get from the house of cards free market.

CG worries about the future of real estate:

Once we stabilize the prices, what prevents the whole thing from starting again? I hear lots about the government doing things to stop the free fall, and get the free market moving again, however I have yet to hear anything about the changes that are going to prevent this from happening again.

And Janet Shelton, an Escondido homeowner I interviewed for the story today, added some thoughts in an e-mail this morning. Shelton was the one who saw her neighbors and friends use the equity from their homes to purchase new furniture and go on vacation. Now she takes exception to the idea that her tax dollars would help them out:

Two things disturb me. First, from my personal experience, a lot of this was driven by greed and irresponsible behavior. These people are going to get help at the expense of taxpayers and investors. Second, I am 100% sure that none of them would have shared their profits if they had made them; yet, many feel entitled to help.

Some were innocent victims, but a huge number of people were living large!

What do you make of CG‘s or Shelton’s arguments? Drop me a line at kelly.bennett@voiceofsandiego.org.

KELLY BENNETT

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