Comments on: PMI: US Home Prices Likely Lower In 2 Years

By: Chief Tomahawk

Chief Tomahawk — Wed, 08 Jul 2009 22:30:27 +0000

Thor, I think aid for CA would be packaged with a similar band aid for all the states. Maybe a $100 billion this go ’round. Those in better shape because they had “rainy day” funds or just budgeted more reponsibly can choose how to use their share. But the pattern internationally seems to be full fiscal stimuli ahead. I’m not saying I agree with it, but that’s the pattern I see.

By: DeDude

DeDude — Wed, 08 Jul 2009 21:21:09 +0000

But I think they should let all the old MBS and gse bonds float to whatever price the markets sets, and just purchase every new issue that comes along from Fannie and Freddie at a price that keeps the interest locked at current level. That would probably be cheaper in the long run, and there is no reason to bail out the chicken little investors that are bailing out of those bonds.

By: DeDude

DeDude — Wed, 08 Jul 2009 21:05:56 +0000

The Fed is simply purchasing those MBS and GSE’s that the 9 trillion in cash on the sideline refuse to purchase without a risk premium that is completely out of line with the actual risk. So they are ensuring that the interest on a loan (for those who can qualify) is not rising. Although I am sure they would love to have this stabilize the prises of homes, it probably only has a limited effect. The main determinant on whether you can/or will purchase a home in the current market is not the $100/month that a lower interest rate saves you.

By: The Curmudgeon

The Curmudgeon — Wed, 08 Jul 2009 20:28:48 +0000

But Dedude, the Fed’s cash infusion represents about 1/12 of the total value of residential real estate, and almost double what is expected this year in new mortgage originations. It is a massive amount of money focused on a particular sector of the economy. Whether it is inflationary or not in the broader economy is another question. It is undoubtedly having an impact on prices in residential real estate.

By: Thor

Thor — Wed, 08 Jul 2009 19:05:04 +0000

Chief – I’m not sure I agree with that – our Governor has said recently that he will not accept any bailout money from the fed, both our Senators as well as the vast majority of our House members are also against any bailout. In any case, there is no possible way the congressmen from the rest of the country would ever pass that kind of bailout and it would be political suicide for Obama.

By: DeDude

DeDude — Wed, 08 Jul 2009 18:35:25 +0000

“What is utterly amazing is that prices continue to fall in the face of an on-going massive cash infusion by the fed ($1.25 Trillion directly into MBS, another $300 billion into gse bonds). Imagine how things are going to look when they run out of money.”

According to Barry’s 7 AM posting we have lost 4 trillion in house values (that is 4 trillion in destroyed money). If you add in all the other destroyed money (derivatives etc.) we are probably north of 10 trillion. We have another 9 trillion sitting on the siteline in cash scared to death of being anything but mattress stuffing. Why would anybody be surprised that a puny little trillion dollar stimulus and a few other trillions of cash infusions from the fed, cannot get us out of this deflationary spiral. If you are pouring a gallon per minute into the bucket and it is loosing 2 gallons per minute, you don’t have to worry that it will spill over (you actually have to pour even more into it regardless of the screems from all the chicken littles).

By: Chief Tomahawk

Chief Tomahawk — Wed, 08 Jul 2009 18:23:54 +0000

Thor, only the Feds had jurisdiction (via interstate trade) over the actions of Wall St. in CA (I’m talking about the mortgage securitization market which went haywire.) I think therefore CA suffers from a “lack of political will” because they believe it’s the Feds problem, and are thereby waiting for a Fed solution (i.e. a bailout.)

By: Thor

Thor — Wed, 08 Jul 2009 18:16:11 +0000

larst – there is indeed a ‘fix” for the mess here in CA, there’s just no political will to accomplish it.

By: deanscamaro

deanscamaro — Wed, 08 Jul 2009 17:42:49 +0000

I’m having trouble figuring out whether this is a posting of concern or just a positive guidepost along the way of home prices heading down to where they should be. You’re going to have to be more clear on these postings, Barry. You might be giving these Crameresq-like bottom-callers false signals. lol

By: Novemberrain

Novemberrain — Wed, 08 Jul 2009 17:20:05 +0000

In a market where factors other than the seasons have become more important in affecting house prices, such as the availability of mortgage finance and the level of mortgage rates, it becomes increasingly difficult to work out what typical price movement could be expected purely because of the time of year and hence what the seasonal adjustment should be. Prices would further plunge since * No improve in the Job market * Lack of Demand * Since May, Mortgage Rates Have Gone Up * Too Much Supply * Option ARM – The Next Wave of Default * Market Psychology Read more http://www.housingnewslive.com/blog.php Is the Market reviving