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Redfin Real Estate Forums :
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Is it a healthy market if the government has to continue to intervene?
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Is it a healthy market if the government has to continue to intervene?
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StillWaiting
Regular Contributor
Posts: 80
Registered: 09-27-2009
Message 1 of 57
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Interesting article in the L.A. Times: Feared flood of foreclosures in California may be averted Sounds like good news for the bulls, at first glance. But trying to follow their logic, it seems that they are saying the government will likely take more and more extraordinary measures to prop up the market. Is that really good news? If the market cannot sustain itself without government intervention, isn't that really bad news? They admit that while defaults are up, foreclosures are down: According to information released by MDA DataQuick on Tuesday, 50,013 homes were foreclosed upon in the three months ended Sept. 30, down from 79,511 for the same period in 2008.
Default notices -- the first step toward foreclosure -- jumped 19% to 111,689. But the fact that foreclosures are not rising at the same pace as defaults is evidence that banks are being more lenient. But unlike others, who have concluded that more foreclosures will undoubtedly end up on the market, this author seems to draw the opposite conclusion, that these foreclosures will be subsidized by the government at any cost. In other words, keeping homes unaffordable will continue to be the government's top priority. Some of the scarier excerpts:
Another proposal being considered by the Obama administration would encourage banks to sell distressed properties to investors who would agree to rent the home to the previous owner.
(Wow - so rather than just keeping prices out of reach of first-time buyers, this proposal would actually physically prevent first-time buyers from even having a chance to buy a house, by selling houses directly to investors.) Another plan is to simply take money from taxpayers and give it outright to underwater borrowers in the form of principal reductions: The Congressional Oversight Panel, created last year to monitor taxpayer bailout funds, has urged the administration to consider additional anti-foreclosure programs. The report criticized current loan modification efforts, which typically lower monthly mortgage payments, because such plans don't cut the total loan amount. That leaves too many homeowners "upside down," or owing more on their mortgages than their homes are worth. It's becoming more and more obvious that the government doesn't want you to buy a house. What they want to do is buy up all the available housing with your tax money, at artificially inflated prices, and then rent it back to you. This quote sums up the attitude perfectly: "I don't think people are saying it to each other, but they're seeing it's in nobody's interest to have mass foreclosures," said Richard Green, director of USC's Lusk Center for Real Estate." "In nobody's interest"? What about buyers? It's as though buyers do not exist anymore.
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10-24-2009 05:24 PM
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Re: Is it a healthy market if the government has to continue to intervene?
[ Edited ]
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Nanomug
Super Contributor
Posts: 2229
Registered: 05-30-2009
Message 3 of 57
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I suspect its not just the struggling homeowners that is the concern. There seems to be a cycle of losing jobs, losing homes, losing taxes, losing more jobs ... It is a bad spiral. Whether the government should get involved I don't know. The middle class is getting wiped out in lots of areas and the wealthy get more wealth. The banks don't want more foreclosures, the want the market to stabilize. The more foreclosures the more they fear that lowered values will cause more underwater homeowners to bail. If there aren't changes made to lending practices then we'll be back to this situation again and quite soon. I get at least 2 letters a month and at least one phone call telling me that its a good time to refi and take that vacation I deserve. This is from my lender. I get stuff from other lenders as well. This has gone on for about 10 years. I wonder how many homeowners who lost their homes started believing their lender that they deserved the vacation or car and that their homes could provide it for them. Message Edited by Nanomug on 10-24-2009 09:21 PM
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10-24-2009 09:17 PM
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Re: Is it a healthy market if the government has to continue to intervene?
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Glona
Regular Contributor
Posts: 113
Registered: 01-17-2009
Message 4 of 57
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I seriously doubt that is the " keeping homes unaffordable will continue to be the government's top priority" or " It's coming more and more obvious that the goverment doesn't want you to buy a house" Of course the gov and banks are going to do whatever they can to keep the market afloat and prices stable. The number of first time buyers is a small fraction to the millions of others who are facing foreclosure and have lost equity in their homes. Our economy is way too connected to real estate nowadays to ever let the market crash completely. The market has dropped, and probably going to stay here in the trough for some time. They will do whatever they can to keep it from dropping much lower
Yes, the market did an outrageous artificial upswing due to greed and ignorance. ( Mostly greed!!) But it's here to stay. Is it fair?? Is is right??? No, but like they say we can't change the past. Only learn from it. Unfortunately I seriously doubt that we the people will learn. ( Ignorance and greed again)
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10-25-2009 07:43 AM
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Re: Is it a healthy market if the government has to continue to intervene?
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eHollywood
Contributor
Posts: 24
Registered: 06-11-2009
Message 5 of 57
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It has indeed been a govt policy for almost 10 years now to artificially inflate housing values, starting with keeping interest rates unreasonably low, and fueling the bubble until it took on a life of its own. Even after the bubble has burst, they're trying hard to get it restarted, to keep some air in it, all at the cost of those responsible Americans who won't buy something they can't afford. Meanwhile, these responsible Americans are being taxed to keep the speculators in their homes, and to give thousands of dollars to other people to buy homes. It's a truly evil system they have created, and they need to step back and let the market take over once again. It's just what you say, StillWaiting. All these articles and policies completely ignore those responsible people who still would like to buy, but prices are still artificially being kept too high.
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10-25-2009 07:51 AM
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Re: Is it a healthy market if the government has to continue to intervene?
[ Edited ]
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1776
Regular Contributor
Posts: 125
Registered: 05-20-2009
Message 6 of 57
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http://www.doctorhousingbubble.com/ http://mhanson.com/archives/274 I still think it is all about how long the government can keep the public perception that things are going to turn around. People just do not realize that there's no way things are going back to normal. L.A. still has a lot of bubble deflation to go. Message Edited by 1776 on 10-25-2009 09:45 AM
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10-25-2009 09:44 AM
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Re: Is it a healthy market if the government has to continue to intervene?
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ENSO
Contributor
Posts: 37
Registered: 06-03-2009
Message 7 of 57
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Well said. If I can give you 100 Kudos, I will.
eHollywood wrote:
It has indeed been a govt policy for almost 10 years now to artificially inflate housing values, starting with keeping interest rates unreasonably low, and fueling the bubble until it took on a life of its own. Even after the bubble has burst, they're trying hard to get it restarted, to keep some air in it, all at the cost of those responsible Americans who won't buy something they can't afford. Meanwhile, these responsible Americans are being taxed to keep the speculators in their homes, and to give thousands of dollars to other people to buy homes. It's a truly evil system they have created, and they need to step back and let the market take over once again. It's just what you say, StillWaiting. All these articles and policies completely ignore those responsible people who still would like to buy, but prices are still artificially being kept too high.
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10-25-2009 11:14 AM
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Re: Is it a healthy market if the government has to continue to intervene?
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Jazzman
Regular Contributor
Posts: 365
Registered: 02-12-2009
Message 8 of 57
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I think lenders have a better understanding of the problem than the government, and the real estate industry has less of an understanding of the "new" economic order than the government. You have several competing groups chasing different goals, and as the ground beneath them shifts, so do the goal posts. Where I do agree with some of the above, is that the 'buyer' per se isn't an influential force within these competing groups. While it is true that the government has offered enticements for buyers, they probably weren't thinking altruistically. However, buyers still have quite a few thing working in their favor; unemployment, foreclosures, tight credit, and last but not least the option not to buy, due to favorable rents. Common sense is the buyers best friend ...if you can't afford it, don't buy it.
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10-25-2009 11:36 AM
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Re: Is it a healthy market if the government has to continue to intervene?
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StillWaiting
Regular Contributor
Posts: 80
Registered: 09-27-2009
Message 9 of 57
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eHollywood wrote:
It's just what you say, StillWaiting. All these articles and policies completely ignore those responsible people who still would like to buy, but prices are still artificially being kept too high.
Well said. I guess what's most galling about it is the level of denial. The mainstream media constantly plants the meme that all these policies are to help the middle class. But nothing could be further from the truth. If you look at who is really benefiting from this, it is an elite group of bankers and investors. Do people who paid half a million dollars for a house that's worth a quarter million today really think this price-fixing is going to allow them to get their head back above water? They can get all the "workouts" they want; they're still debt slaves.
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10-25-2009 12:11 PM
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Re: Is it a healthy market if the government has to continue to intervene?
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1776
Regular Contributor
Posts: 125
Registered: 05-20-2009
Message 10 of 57
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I am big on common sense as well but it is really hard to plan for the future right now. Both state and federal taxes are going to increase radically. Prices on commodities and foreign goods are going to go up. State government jobs are going to see further cut backs while we are going to have to pay for a huge increase in federal bureaucracy and debt. California unemployment will likely see another jump probably as soon as the end of the Christmas season. Our children are going to need help because the bill that we are charging right now will be presented to them and that is only if we can keep the ponzi scheme going. If not we are all going to have to substantially lower our lifestyles to pay that bill. Frankly, I hope we do have to pay it because it is the only way to stop the irresponsible behavior. As can be seen by the original entry, the entire cost of this fiasco will be borne by the taxpayer many who are not even born yet and the situation is quickly getting substantially worse. A country cannot prosper rewarding liars and cheats and creating entitlements that it cannot afford.
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10-25-2009 12:12 PM
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