The government, believing that a correction in house prices would be catastrophic, has tried to put a floor under the housing market. It's not working:
WASHINGTON (Reuters) – The United States has thrown trillions of dollars at the slumping housing market and it still looks wobbly.
The government seized the two biggest mortgage finance companies and offered as much as $8,000 in tax breaks to entice home buyers, while the Federal Reserve has bought more than $1 trillion in mortgage-related assets as a way to drive down borrowing costs.
Yet a series of reports this week will likely show home sales remained weak in February. Although bad weather is partly to blame — snowstorms struck the densely populated East Coast last month — it does not fully explain the poor demand.
If Tuesday's report shows a drop in existing home sales for February, as economists polled by Reuters expect, it would mark the third consecutive month of declines and push the sales pace back to levels seen last summer, when mortgage rates spiked.
Wednesday's report on new home sales, which represents only a sliver of the housing market, is expected to show a slight increase. However, the new home segment remains moribund. Builder confidence is near an all-time low and both housing starts and permits fell in February.
So where does the housing market go from here?
As poorly as the housing market has performed so far this year, some economists think it may soon get worse. The tax credit, which was expanded and extended late last year, expires in April, the Fed is wrapping up its mortgage asset purchases by the end of this month, and millions of homeowners are behind on payments, leaving them vulnerable to foreclosure, which tends to drive down prices of neighboring homes.
In their anxiousness to prevent the housing market from catastrophe, government programs have exacerbated the problems they hoped to fix.
When I was three months pregnant with my youngest daughter, I felt miserably ill. My doctor told me there was only one sure solution for my maladies — wait six months and they would go away. The housing market is in a similar situation. It just takes time for prices to correct and the economy to improve.
There are signs that the government is finally pulling back from the market. Perhaps allowing the tax credit to expire and the Fed backing out of the MBS market are signs they are finally going to step aside. Now if they would only back out of foreclosure "fixes". . .
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Dallas-Fort Worth foreclosure filings for April top $1 billion
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>WASHINGTON (Reuters) – The United States has thrown trillions of dollars at the slumping housing market and it still looks wobbly.<
ReplyDeleteI thought it was supposed to say: "The United States has thrown trillions of dollars at BANKSTERS and the housing market still looks wobbly". But then again this title would not require further explanation.
all that money wasted on banksters and so few regular Americans! shame
ReplyDeleteI'm STILL trying to figure out who in their right mind would buy a new home in this economy.
ReplyDeleteWho would do that ?
I would buy. Some houses are finally getting reasonable prices - but the property taxes are so high it's ridiculous. So I wait. Around here $8000 a year taxes gets a plain ranch house.
ReplyDeleteWe are on the cusp of possibly the worst economic disaster the world has ever seen and you'd be willing to go into debt for 30 years?
ReplyDeleteThat just doesn't make sense unless your buying a place to make a living off of or fortify ( a fruit farm or off grid acreage)
That's right up there with buying a 40K SUV right now - what the hell for !
And to think if every middle class or lower family got a $100,000.00 stimulus check and were told you must spend 90% of it, you think this country would be in the condition it's in?
ReplyDeleteI would buy 100,000 crotch protectors and hand them out to my fellow Americans.
ReplyDeleteIf you are renting a house and loose your job at least here in TX you can be evicted within weeks and be sleeping in a tent. If you have a mortgage you can squat for a year or more before the police knock on your door so you have time to prepare. Maybe get a bigger tent and generator :)
ReplyDeleteI anticipate being evicted when I can no longer pay the rent here in the great state of Texmex. It will be tough to survive.
ReplyDeleteWe are so screwed.
Yeah the property tax is the main thing now, the houses MAY be lower, but tell that to the local ass sessor, my place went "UP" By 30K last year as did a lot here, yeah we bitched about it at their office, I got a letter back, "the assessed price stays". MF are gona do this from now on, and what ya gona do? leave a paid for house for a place to pay 3 times the rent???? yeah right!
ReplyDeleteHouses need to come down another 20%.
ReplyDelete