Posted on 12/28/2009 7:30:48 AM PST by FromLori
Good news for homebuyers... bad news for taxpayers.
As everyone knows there has been a massive government effort to support house prices. Some of this has been aimed at limiting supply (modification programs, various foreclosure moratoria), and some has been aimed at increasing demand (tax credit, lower mortgage rates, loose lending standards).
Here is a quote from Secretary Geithner from a recent Newsweek interview by Daniel Gross:
"We were very careful from the beginning ... to say that we are going to focus the bulk of the financial force on bringing interest rates and mortgage rates down to cushion the fall in housing prices and help stabilize home values, which will feed into people's basic sense of financial stability."
To help keep this straight, here is a list of the status of a number of programs:
(Excerpt) Read more at businessinsider.com ...
>> Good news for homebuyers
Propping up home prices at bubble levels is not necessarily so good for home buyers. Home SELLERS, maybe.
If the government would let the market work, home prices would fall 25% to 40%, where they SHOULD be. Now THAT would be good news for home buyers!
Yea I know but that was there choice of words I really posted it to show the crap we are going to have to pay for like the story I posted last night.
From,
This is the absolute DUMBEST thing to do now. The idea that artificially propping up home prices will somehow help the economy is insane. All it will do is direct more (very scarce) resources into that area (i.e., building new houses, or financing overpriced houses), rather than where those resources can actually make a difference...such as in modernizing our factories or building new highways.
But heck, we had an economy that (appeared to) grow during the last housing bubble...why not repeat?
>> that was there choice of words
I know. And my comments were aimed at the article, not at you personally.
FRegards
We know some folks who are renting, hoping for local house prices to drop into affordability (under $300k).
Thanks a bunch Govt for borrowing more than we, our kids and our grandkids can afford, to keep housing here unaffordable. House prices till double and triple what they were 10 years or so ago.
Wages sure aren’t. For those who still have jobs anyway.
At least the Stimulus worked to grow Govt, support the big banks and to keep housing unaffordable.
Now on to screwing up the healthcare system, to make sure everyone’s prior complaints become REALLY justified.
Great post! Thanks Lori. It looks like a lot of the smaller FED/TREAS programs are expiring soon. The emergency fix-a-flat slime used in the housing blowout did its job. We are now riding on 4 donuts and have miles to go before we get our cash for clunkers, or will it be ameros for abodes. /sarcasm
Yes lol I know I didn’t take it personally :)
If housing prices where to drop that much hundreds of thousand of home owners would just simple stop making mortgage payments and the banks would then completely crash.
I was just commenting to my brother the other day that unfortunately the market distortions which caused housing prices to become artificially inflated and then crash are still in place. It appears there are even more market distortions than I knew about. It does not surprise me. As long as government meddles in any market, housing or otherwise, expect this type of volatility and mess. You cannot engineer the market to better effect.
>> If housing prices where to drop that much hundreds of thousand of home owners would just simple stop making mortgage payments and the banks would then completely crash.
If some banks need to crash — and some homebuyers who mortgaged their souls to buy overpriced real estate go bankrupt and ruin their credit — so be it.
What needs to happen needs to happen! Timmy and Helicopter Ben are merely delaying the inevitable. It would be “blood in the streets” for borrowers and foolish lenders, but they’re the ones that caused the problem in the first place.
What Bambi and Helicopter Ben are doing will mean “blood in the streets” for savers and thrifty folks who didn’t overextend themselves, while bailing out those who CAUSED the problem.
Can you say “moral hazard”?
And if house prices fall and those renters buy a home, it will knock the pins out from under the rental market. There was an article a while back stating that because house prices were still too high, many were renting because they had to, or, like your friends above, were waiting for a drop.
No matter how you cut it, the whole housing situation is a mess and, IMO, is not going to get better for years.
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