Who is to Blame for the Housing Crisis

It is no secret that our country's economy is in dire straits. As we look at around us, job losses, massive layoffs, retirement and savings diminished, we ask ourselves "How did we get here?". Thomas Sowell delves into this matter in his recent book "The Housing Boom and Bust". Sowell uses knowledge, history, and economics to examine how exactly the housing market crumbled. Sowell posits that the downfall began with Washington politics. He goes on to say that there were several factors leading to the crisis and that politicians are now looking to deflect the blame to anyone other than themselves. Questionable lending during the housing boom created situations where people bought homes they realistically could not afford. Mortgage companies became less concerned about the loan standards from quality buyers and increasingly concerned with building houses for people regardless of whether or not they could afford them.

The crisis our country now faces and the impending large financial bailouts occuring in both the housing and auto markets is one that I feel our country will eventually overcome. After all this is not the first economic crisis our country has endured. However, many people feel strongly that our government led us into the current crisis by supporting and driving the loosening of mortgage loan requirements. Sowell states in his book that politicians pushed lower loan requirements in order to make homes more affordable for more people. Basic economic sense dictates that people purchasing homes they simply cannot afford will lead to economic downfall, however government pushed forward until the bottom fell out from the housing market. What we have learned is that mortgage requirements are put into place for a reason and in doing so the buyer, the lending companies, and home builders are protected. Affordable housing is something our economy is in desparate need of right now, however until government ceases to push for less strict lending policies it will be a long road to recovery.