The Futility of Foreclosure Moratoriums

Leinberger points to over-investment in metropolitan fringe areas as one of the root cause of the current crisis. Foreclosure moratoriums only delay the inevitable, he says, suggesting that housing values in most fringe neighborhoods will never return to their boom-time peaks. Such 'pretend and extend' policies simply encourage underwater homeowners to remain in economically crippled areas, contributing to long-term unemployment.

The result may be a reverse migration from exurban homesteads, Leinberger writes:

'The good news in this continuing mess is that there is substantial pent-up demand for higher density urban places, which will put a sustainable foundation under the U.S. economy similar to the foundation we enjoyed during the last half of the 20th century when we were building the drivable suburbs.'