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In One Key Way, The Housing Crisis Is Still Going Strong


By Patrick   Follow   Sat, 23 Mar 2013, 7:56am PDT   974 views   11 comments   Watch (2)   Share   Quote   Permalink   Like   Dislike  

http://www.npr.org/blogs/money/2013/03/11/173631168/in-one-key-way-the-housing-crisis-is-still-going-strong

But in one key way, housing remains in crisis mode: The U.S. housing market is still a ward of the state. The vast majority of new mortgages $1.6 trillion out of a total of $1.9 trillion last year alone are guaranteed by the federal government. If a borrower defaults on a guaranteed loan, taxpayers are on the hook.

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marcus   befriend   ignore   Sat, 23 Mar 2013, 8:02am PDT   Share   Quote   Like   Dislike     Comment 1

Interest rates are also subsidized to be as low as they are, from the treasury buying it's own notes and bonds. I believe many people are unaware of how unprecedented this is. This is a huge support to the market, not just for would be buyers of a residence, but also for "cash" investors who leverage their properties after paying cash for them.

Historically, the fed set extremely short term rates, (ie fed funds rate, and participating in the 90 day T-Bill market, etc) and the bond market was a true market where investors set the price (and hence the yield) for longer term treasury notes and bonds.

You posted this the other day, where it's discussed. This guys column is great.
http://www.oftwominds.com/blogmar13/rates3-13.html

mell   befriend   ignore   Sat, 23 Mar 2013, 8:11am PDT   Share   Quote   Like   Dislike     Comment 2

It's criminal.

mell   befriend   ignore   Sat, 23 Mar 2013, 8:34am PDT   Share   Quote   Like   Dislike     Comment 3

robertoaribas says

marcus says

Interest rates are also subsidized to be as low as they are, from the treasury buying it's own notes and bonds. I believe many people are unaware of how unprecedented this is. This is a huge support to the market, not just for would be buyers of a residence, but also for "cash" investors who leverage their properties after paying cash for them.

Don't hate the player... play the game! buy a home, go 30 years... get one that has a good price/rent ratio, kick back, and someday when inflation hits, you win... and win and win...

Sure, like it worked well for the real estate market in Argentina - oh wait, it collapsed during inflation - this time is different ;)

mell   befriend   ignore   Sat, 23 Mar 2013, 12:51pm PDT   Share   Quote   Like   Dislike     Comment 4

Argentina massively devalued its currency, so if you have enough money after food and energy to entertain nice mortgage, then by nominal means it doesn't look so bad, by real it's a different story - I wonder why they left the blue line out but had it in for other countries ;) They say that rents there though suffered a significant decline lately. Also ironically it was a lot of of foreigners who took advantage of the devalued currency and bought some of the real estate the natives could not afford. The jury in the US is still out, and maybe foreigners will plow in (even) more once the dollar weakens more and cushion some of the next correction. Hard to tell, just saying, don't get too excited yet. Also, as a landlord you may be ok either way, but people who just want to buy and live in their "dream home" may want to exercise caution before taking on the debt of their life.

RentingForHalfTheCost   befriend   ignore   Sat, 23 Mar 2013, 1:19pm PDT   Share   Quote   Like (2)   Dislike     Comment 5

marcus says

Interest rates are also subsidized to be as low as they are, from the treasury buying it's own notes and bonds.

It is only $85B/month. I think we have about 150 million earners in this country. So, to put it in per earning person it is only 85,000,000,000/150,000,000 = $566 per person, per month. Just like another HOA fee. Nothing at all really, what are you complaining about. Why not 150B/month. Lets push the 30yr interest rates down to 2% and make everyone rich. If there is no down-side, crap lets make it $300B/day.

ELC   befriend   ignore   Mon, 25 Mar 2013, 11:15am PDT   Share   Quote   Like   Dislike     Comment 6

robertoaribas says

someday when inflation hits, you win

What about when interest rates or inventory inflate? Who's giving bojo's under the bridge then?

bgamall4   befriend   ignore   Mon, 25 Mar 2013, 2:04pm PDT   Share   Quote   Like   Dislike     Comment 7

mell says

It's criminal.

The goal of Wells Fargo, the TBTF banks, the IMF and Ben Bernanke is to start securitization again. The investors will not accept securitization without government guarantees, the Bernanke backstop. Now you know what the plan is.

bgamall4   befriend   ignore   Mon, 25 Mar 2013, 2:06pm PDT   Share   Quote   Like   Dislike     Comment 8

RentingForHalfTheCost says

Lets push the 30yr interest rates down to 2% and make everyone rich. If there is no down-side, crap lets make it $300B/day.

That is the goal. The Fed wants interest rates low for longer than the interest rate vigilantes can stay solvent. Same in Japan where Kile Bass will get his lunch eaten. Someone in Japan will eat his lunch for betting against the Japanese treasury bond.

fedwatcher   befriend   ignore   Mon, 25 Mar 2013, 6:25pm PDT   Share   Quote   Like   Dislike     Comment 9

Guys,

I fail to see why you have a problem with 'roberto'.

He is in a market where his investments work as the conditions are right and he has local knowledge.

His market is nothing like California where tenants have all the edge. In Maricopa County Arizona, where he operates, Sheriff Joe can get a deadbeat renter out in 30 days not 18 months like California.

If you want to be a landlord who makes money, you need to move to Arizona. If you do not, stop complaining as Roberto knows his market.

xenogear3   befriend   ignore   Mon, 25 Mar 2013, 9:07pm PDT   Share   Quote   Like   Dislike     Comment 10

The fed reserve should just send everyone a $566 check per month.
Why do only the banks get the money?

taxee   befriend   ignore   Wed, 27 Mar 2013, 5:00am PDT   Share   Quote   Like   Dislike     Comment 11

xenogear3 says

The fed reserve should just send everyone a $566 check per month.

Why do only the banks get the money?

That's just it. The fed send a few billion to some old/unfortunate folks via 'deficit spending' and use it as a justification to do anything they want with the other TRILLIONS. It works until it doesn't.

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