Housing: It gets Worse, Way Worse

The speculative mania in housing has been extended by massive Federal Reserve and government intervention; the government now owns or guarantees 2/3 of U.S. mortgages.

While speculative bubbles may pop in terms of sales and valuations, the psychology that underpinned the mania lives on for some time--especially if government extends the speculation with massive interventions.

I sincerely doubt the average American understands the full measure of Federal intervention to prop up the U.S. housing market. The numbers casually dropped (with little context, of course--this is pure MSM "coverage," after all) in the Wall Street Journal report No Easy Exit for Government as Housing Market's Savior (WSJ.com) are truly mind-boggling:

To keep funds flowing to the housing market, the government bailed out Fannie Mae and Freddie Mac last year and now effectively owns the mortgage finance giants and their combined $5.4 trillion in loan portfolios. To keep mortgage rates low, the Federal Reserve is on track to purchase nearly $1.5 trillion in debt issued or guaranteed by the government's various mortgage arms and another $300 billion in Treasurys, which set the benchmark for home lending.

What the reporters fail to mention is the value of all U.S. mortgages is about $10 trillion-- meaning the U.S. government now guarantees over half of all mortgages just with Fannie and Freddie.

But wait--it gets worse--much worse:
LINK HERE

VANCOUVER CANADA HOUSE SHACK SOLD FOR 1.142 MILLION
Five days after that open house, seven agents lined up to make their offers. The asking price was $959,000, but because of the competition, the bidding war pushed the price higher. Only two bids came in at less than $1 million. In the end, the home sold for a staggering $1.142 million – more than $180,000 over the original price tag. 10x10 Master Bedroom. Backs onto a condo complex...and it is just half a block off one of the city's busiest thoroughfares.