THE ONLY THING THAT CAN PUT A BOTTOM IN THE REALESTAE MARKET IS NEW BUYERS!
I had to say no on bailing out homeowners with bad mortgages. Not because I want foreclosures, but because it won't work. There is not enough money in the world to bail out enough homeowners to stop the fall of real estate prices.
For the money it costs to bail out banks and bail out homeowners we could put a bottom in the market right now. Obama hade a good start with tax credits for 1st time home-buyers.
Incentives to buy, loan guarantees, help with down-payments if you can show the ability to pay a mortgage, tax credits for home buyers even if they aren't first time home buyers and even if they are buying it for an investment or rental property, are all a better way to put a bottom on the market.
If you can stop the market from crashing further then most of the homeowners you're looking to bail out would stay in their homes. If the market keeps going down and more and more people are going to be upside down in their mortgages then people are going to keep walking away from their loans no matter how much "good money after bad" you throw at them. A tax credit won't be enough to keep someone paying a mortgage on a house that is worth one third of what they owe on it.
You want to bail out the banks? If you give loan guarantees or down-payment assistance to homebuyers that money will go directly to the bottom line of the bank, and it will staunch the hemorrhaging of the housing crash so the banks assets will stop falling in value, also adding to the bottom line.
Obama is right on this one but he hasn't gone far enough.
Comments (1)
What we really need is a living wage that makes housing affordable to the working person. Otherwise prices need to keep coming down until homes are affordable.