Government Propping Up Real Estate
Off to Boston for a business meeting — but before heading to JFK, I had to toss up one more post on the various government interventions in Real Estate:
“Over the past year, the government has intervened heavily at essentially every stage of the home-buying process. In fact, more than 80% of the new residential mortgage loans made this year benefited from some form of government support, according to the trade publication Inside Mortgage Finance.
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.
And to boost sales, the government also is offering $8,000 tax credits to first-time home buyers.”
And, it does not appear there is any end in sight any time soon.
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Source:
No Easy Exit for Government as Housing Market’s Savior
JON HILSENRATH and DEBORAH SOLOMON
WSJ, SEPTEMBER 15, 2009
http://online.wsj.com/article/SB125297162259710323.html
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September 15th, 2009 at 5:32 am
[...] News Sources wrote an interesting post today onHere’s a quick excerptOff to Boston for a business meeting — but before heading to JFK, I had to toss up one more post on the various government interventions in Real Estate: “Over the past year, the government has intervened heavily at essentially every stage of the home-buying process. In fact, more than 80% of the new residential mortgage loans made this year benefited from some form of government support, according to the trade publication Inside Mortgage Finance. To keep funds flowing to the housing market, [...]
September 15th, 2009 at 7:47 am
like to see one more line .. make it red .. the missing RGB color
a shaded wide line from the private sector interest % range .. do they/can they compete .. I would suspect the upper embarkation to be either the disenfranchised or the kickback schemers
September 15th, 2009 at 9:56 am
Moin from Germany,
here the quote from the mortgage broker…..
“Over 29 years in business, we’ve always thought of ourselves as being in the free-enterprise system. Today I think of myself as a government contractor”
AMEN :-)
September 15th, 2009 at 9:58 am
This is what I’ve been saying all along. There is no housing market without the supposedly TBTF government’s interventions, both fiscal (e.g., $8,000 tax credit) and monetary (e.g., $1.45 trillion being printed and funneled directly to the housing market).
All its done is arrest the slide. Alas, this won’t end any better than did the policies that led us to undertake these drastic measures. It’s just more of the same, a bunch more.
September 15th, 2009 at 10:22 am
the Red lower embarkation to be either the banker, lobbiest or politician
September 15th, 2009 at 10:36 am
There is nothing more beautiful than governments mopping up the what remained after the burst of a bubble and at the same time creating a new one.
September 15th, 2009 at 11:23 am
How the hell do we ever get out of this situation? How do we ever get back to some semblance of a “normal” market? I know, some people will say, “why should we, what’s wrong?”
Of course you could write a book on that subject, explaining how this goes badly. I’m sure we’ll live it too.
September 15th, 2009 at 2:04 pm
This is what should be happening. Now that loans are only being made to those that can afford it, rates must fall for funds available to clear the market. The housing bubble was keeping rates too high and without it they must fall.
September 15th, 2009 at 4:06 pm
“How do we ever get back to some semblance of a “normal” market? ”
Remember the cartoon of the Bear flying off the cliff? That’s what happens when you mess with nature. The more they pump this up with hot money the more danger of a discontinuity along the lines of 1987, only without the recovery. Look at who is long this market, weak hands, prop desks, retail inwestors and nimble hedge funds (e.g. Barry) with tight stops, with very few shorts. The selling could be intense and there is not much to break the fall.
Trees don’t grow to the sky and nor do P/E ratios once BTE becomes NFG.
September 15th, 2009 at 4:55 pm
Eventually there’ll be a jailbreak with the big banks in a race to unload their REOs
September 15th, 2009 at 5:29 pm
“Just when we thought it was over, it was really only beginning.”