Home Prices in the West Are Rebounding as Inventory Shrinks

http://www.nytimes.com/2012/06/21/us/wests-home-prices-rebounding-as-availability-shrinks.html

---------- Forwarded message ----------
From: barry levine 
Date: Thu, Jun 21, 2012 at 10:13 AM
Subject: re: Home Prices in the West Are Rebounding as Inventory Shrinks
To: letters@nytimes.com


To the Editor:

   In a functioning housing market, owners realize gains or losses on value at the time that they sell. That was the way the world worked until the late nineties. Then we had the housing bubble. Owners discovered that they could borrow against the growing paper value of their homes with (eventually) disastrous consequences. Now that game is closed to the many homeowners who find themselves underwater. But it's open season for the banks who now own huge portfolios of foreclosed homes. By keeping those properties off the market they are driving up their paper value. In effect, the banks are creating capital out of their junk holdings by manipulating the prices of homes on the market.

Barry Haskell Levine