Why the End of the Housing Boom May Not Be Such a Bad Thing | Wall Street Journal

Why the End of the Housing Boom May Not Be Such a Bad Thing

By James B. Stewart From The Wall Street Journal Online

Let's be honest with ourselves: Aren't you just a little glad the real-estate boom is over? No more bragging from self-congratulatory owners of property in high-priced areas. No more breathless tales of bidding wars and comparative sales.

Last week's figures for sales of new and existing homes, both showing sharp declines of more than 4%, make it clear that the long-anticipated real-estate downturn has begun. I realize that a significant downturn in any market causes hardship for some. Tales of woe are mounting from the real-estate industry, from home builders and architects, to empty-nesters and retirees hoping to cash out of big homes and move to smaller places.

But let's look at the bright side, too. The real-estate market during recent years had many unhealthy economic and psychological effects. Soaring prices forced many people, especially young people buying their first homes and starting families, out of many markets. It pushed too many people into dreadful mortgages. It misallocated capital to construction for which there was no fundamental demand...