Housing reports are ugly and future is uncertain
January 25, 2010 by admin
The housing market has quickly lost all of the momentum the government worked so hard to achieve with numerous stimulus programs over the last twelve months. Today’s existing home sales report was anything short of disastrous for the month of December as home sales continue to decline and lose ground. The market has been extremely pessimistic about the possibility of continued improvement as consumers appear to have made there last push in the months of November to lock in on last minute purchase contracts. The downturn in November and December for the housing markets, come after six straight months of positive gains from the real estate market. The most recent two months of data on housing should be sending major red flags to the politicians in Washington that the real estate market is nowhere near stable and the idea of eliminating a government tax credit as early as the end of April is likely to have disastrous effects on the property industry.
The real estate market had shown some early signs of reaching a bottom in 2009 as tax rebates and extremely low mortgage rates helped to spur buyers back into the markets. Investors lined up to purchase properties, often ones that had been foreclosed by banks and requiring significant property restoration for twenty percent of values during the peak of the real estate boom. The low mortgage rates, pushed even lower with a strong influence by the government to try and subsidize the housing markets.
2010 could paint an entirely different picture for the housing markets. The first time and move up tax credits are due to expire in the next ninety days. The employment market has shown zero signs of improvement. Confidence in the government and Ben Bernanke are quickly eroding as concerns over the FOMC’s role in the bailout of AIG and the relationship of Goldman Sachs to Henry Paulson and Timothy Geithner are certainly going to be further investigated through congressional hearings. President Obama has taken bold steps, endorsing a plan referred to as the Volker to reform the supermarket banks, which many are labeling as socialist in nature. The distance between Main Street and Wall Street continues to grow larger, especially as reports that banks continue to neglect lending money, a move that is further slowing the economic recovery down. News out of HUD and the FHA mortgage program are another indicator that the government has no concept of a meaningful solution to bring buyers into the market to balance out the housing supply. The Making Home Affordable program continues to be criticized as too little, too late and too much red tape to really help homeowners in need. All in all, the hope for a better real estate market this year is going to take a bit more than a miracle to accomplish.