House prices due to fall another 20%?
Are we done now trying to prop them up? Because it looks like all we’re getting for our money is still-falling values and colossal debt.
Oh, my dear Vodkapundit…it’s worse than that…much worse.
The banks are sitting on inventory, loads of inventory. And…they have had moratoriums on foreclosures that cannot last forever. The government and the banks have kicked the can down the road for a number of reasons.
Ripping off the bandages in one swift move, they say, would have collapsed many, many, banks…including some major players. It also would have brought to light exactly what the Freddie/Fannie/ACORN/Frank&Dodd did to the economy. No way could the Democrats supermajority withstand that revelation.
So, the dam is crumbling and they are watching the buildup behind its walls amass to biblical proportions.
Darrell Issa might be interested in seeing whose thumbs are in the holes…and we might get some honest answers.
On HAMP, officials were surprisingly candid. The program has gotten a lot of bad press in terms of its Kafka-esque qualification process and its limited success in generating mortgage modifications under which families become able and willing to pay their debt. Officials pointed out that what may have been an agonizing process for individuals was a useful palliative for the system as a whole. Even if most HAMP applicants ultimately default, the program prevented an outbreak of foreclosures exactly when the system could have handled it least. There were murmurs among the bloggers of “extend and pretend”, but I don’t think that’s quite right. This was extend-and-don’t-even-bother-to-pretend. The program was successful in the sense that it kept the patient alive until it had begun to heal. And the patient of this metaphor was not a struggling homeowner, but the financial system, a.k.a. the banks.
The problem, of course…is that the patient is not healing.
Man, that’s an ugly assessment. Two years, maybe even one year, ago I’d have said unreasonably ugly, but my optimism is rapidly dwindling. Between housing shadow inventory, stubborn unemployment, (probably to likely) rising gas prices, and Baby Boomers retiring without enough savings, I don’t see anything getting the economy revved up any time soon. Thanks for harshing my mellow, man…
From a personal level, I welcome the drop. As a renter who wants to buy but can’t afford to in the market in which I live, I’ve been more than a little pissed at how my tax dollars are being used to prop up the market so that I still can’t afford to buy a house. Let it do what it’s supposed to do so that people like me who won’t buy what we can’t afford can buy and reduce the stock of houses in the hands of people who can’t afford them.
Meanwhile, if the economy does need help digging out once it’s found its bottom, that help won’t be there because the government already spent all the money that it might have used more productively by waiting until the market was ready for it.
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