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


By Patrick   Follow   Sat, 23 Mar 2013, 2:56pm   822 views   11 comments
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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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  1. marcus


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    1   3:02pm Sat 23 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    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

  2. mell


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    2   3:11pm Sat 23 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    It's criminal.

  3. mell


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    3   3:34pm Sat 23 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    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 ;)

  4. mell


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    4   7:51pm Sat 23 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    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.

  5. RentingForHalfTheCost


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    5   8:19pm Sat 23 Mar 2013   Share   Quote   Permalink   Like (2)   Dislike  

    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.

  6. ELC


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    6   6:15pm Mon 25 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    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?

  7. bgamall4


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    7   9:04pm Mon 25 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    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.

  8. bgamall4


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    8   9:06pm Mon 25 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    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.

  9. fedwatcher


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    9   1:25am Tue 26 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    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.

  10. xenogear3


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    10   4:07am Tue 26 Mar 2013   Share   Quote   Permalink   Like   Dislike  

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

  11. taxee


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    11   12:00pm Wed 27 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    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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