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What happens when the government stops supporting the Housing Market?
7 Comments · Posted by admin in Bank Owned, Foreclosure, Home Sales Stats, REO, Short Sales
On April 30, the Tax Credit will be gone. Banks seem to be holding ’shadow’ REO inventory that has been reported in the 4-8 million range. Interest rates are set to go higher because of all of the government debt that has been added to the books trying to avert all this.
However, the real scary issue is relayed in a recent Charlie Rose interview with housing expert Robert Shiller:
Charlie Rose: You’ve said that 90% of the housing market is supported by the government.
Robert Shiller: Well, it’s 80% or 90%. Really almost the whole market now is government. And we know this can’t last.Rose: And that means prices are being artificially inflated?
Shiller: It seems to. Government support is especially prominent in sales of existing homes, which shot up to over 6 million on an annual rate in November 2009, the month that the home buyer tax credit initially was supposed to expire.
Fannie Mae has reported the rate of serious delinquencies (90 Days overdue) for conventional loans in its single-family guarantee business jolted to to 5.52% in January from 5.38% in December. This is a 100% increase since January 2009. But look at the chart below and explain to me how we are anywhere near an end to this housing crisis!
It is our stance that we still have some real issues to work thru before we can claim “an end to the housing crisis”.
Jason Roberts
Founder & CEO
Bank Owned · fannie mae · Foreclosures · Freddie Mac · Home Prices · housing market · Pending Home Sales · sell my house · sellmyhouse.com · short sale · stop foreclosure
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Chris · April 5, 2010 at 3:45 pm
Thank you Mr. Sunshine.
Admin comment by admin · April 5, 2010 at 3:55 pm
Sorry you dissapprove Chris. At SellMyHouse.com, we dont hide our head in the sand and ignore the bad news. Our job is to look at the data and figure out how to be prepared to react to it. If you need somebody to blow smoke up your skirt I suggest CNBC. Of course I’ve found it is always best to buy the exact opposite of whatever they are selling you. Always wondered why the vast majority of wall street claimed the ’sub-prime’ issue would be very manageable. Nobody seemed to report the truth until AFTER it happened.
That’s not us I’m afraid.
JKR
David Morris · April 5, 2010 at 4:58 pm
Spot on. A buddy of mine forwarded me your link…very few people are seeing the obvious.
We’re enjoying so many artificial props in the economy right now keeping prices low…
-Excess inventory due to businesses going out of business.
-Excess inventory due to individuals selling off all they can in yard sales and on ebay.
-Artificial liquidity due to the Japanses post office buying T-Bills, even though they’re bankrupt (I think they are actually worse off than we are!)
-Artificial liquidity due to citizens in Greece, Ireland, and the EU in general moving their money from Euros to dollars.
-Artificially high real estate prices due to rats so low that the risk premium has been removed.
-Artificially high real estate prices due to excessive tax credits.
-Artificially high real estate prices due to banks keeping bad debt on the book so as to not tank their entire portfolios.
-Artificially high commercial real estate prices due to banks not foreclosing so as to not tank their entire portfolios.
-Artificially high stock prices due to Harry S. Dent’s “great boom”…which will be gradually moving out of stocks and into more conservative investments.
-Artificially high stock prices due to credit default swaps not showing up as the liability that they truly are.
-Artificially high bond rates b/c of buying our own debt in exchange for dropping HUMINT in China. (boy…that’s a smart one!)
-AND, of course…printing lots of FRNs in the face of a dropping GDP.
I did a video on this a few months ago… http://www.youtube.com/watch?v=-sHeAikFANM
I anticipated a housing fall when the old tax credit went away…it got replaced and it’s still only a matter of time before the piper has to get paid.
Keep up the good work.
David Morris
Author “Urban Survival Guide”
UrbanSurvivalGuide.com
UrbanSurvivalPlayingCards.com
Scott Taylor · April 5, 2010 at 6:10 pm
Mr. Sunshine, LOL. I think Chris thinks that if people believe that the market is not near the bottom it’ll make the home buyers and investors pull back thus hurting the healing process further. Let’s face it, the presses doom & gloom stories don’t help consumer confidence, right?
Peter Anderson · April 6, 2010 at 4:52 am
In my long career in this business I have never seen anything like this. The Carter administration was horrible, but this is much much worse. I am stunned by the incompetence of our elected officials in Washington DC. It almost seems like intentional destruction of our economy. Another thing that really concerns me is not only the idiots we have running this country, but the fact that people in this country elected them. “Remember in November”
Trish · April 6, 2010 at 8:46 pm
Try to remember that this housing crisis began during the PREVIOUS administration, and the current administration is doing what it can to pick up the pieces of the mess that was left behind. The economy was already in a freefall when Obama went into office, and the stimulus package was already approved by the Bush administration. Try to remember who started bailing out the banks- Obama only put more money into them so as not to waste the tremendously large investment that the Bush administration had already made.
Jon Z · May 5, 2010 at 3:47 pm
Great blog post. The banks and the government need to let go of these house cheaper and let the private citizins renovate them and get them back on the tax roll. Sometimes it feels like the government is trying to make this worse.