All things local, foreclosure crisis up close

By watching the news most Americans believe that there is a real crisis in the foreclosure market. This is not the held belief though of Charles Calomiris who is currently serving as a visiting scholar at the American Enterprise Institute (AEI).

Discussing whether the effect of foreclosures on housing prices has been overstated, Calomiris railed against foreclosures to start. “Foreclosures also waste resources because the vacant homes deteriorate or are vandalized. These are also problems for the lender, which is frequently holding the title to the home until it could be sold.”

Calomiris was joined by others from AEI who joined with him in their assertion that the foreclosure crisis is not as serious as some critics have stated. One voice that strayed from the pact was that of Mark Zandi who believes that foreclosures on homes should be attributed to the impact on home prices. “There is a correlation said Zandi.”

Calomiris, who is known as a professor of Financial Institutions at Columbia Business School, posed the question: “foreclosures really have small efforts on prices, they make prices go down but what is the big effect?”

If anything that was agreed upon it was that there is currently no national system to gauge the foreclosures market. Calomiris summed it up when concluding the discussion by stating “housing is a local market.”