{"id":7018,"date":"2009-02-21T07:37:22","date_gmt":"2009-02-21T14:37:22","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=7018"},"modified":"2009-02-21T07:37:30","modified_gmt":"2009-02-21T14:37:30","slug":"obamas-housing-rescue-plan-wont-rescue-housing-but-it-will-delay-the-eventual-recovery-of-the-real-estate-market","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/7018\/obamas-housing-rescue-plan-wont-rescue-housing-but-it-will-delay-the-eventual-recovery-of-the-real-estate-market\/","title":{"rendered":"Obama’s housing rescue plan won’t rescue housing, but it will delay the eventual recovery of the real estate market"},"content":{"rendered":"

This is my column for this week from the Arizona Republic<\/i> (permanent link<\/a>).<\/p>\n

 
Obama’s housing rescue plan won’t rescue housing, but it will delay the eventual recovery of the real estate market<\/strong><\/p>\n

President Barrack Obama came to Mesa Wednesday to announce his new housing initiative. The location made for good political theater, given that metropolitan Phoenix is one of the hardest-hit real estate markets.<\/p>\n

The president promises millions of refinanced or renegotiated mortgages, at a price tag of $275 billion. The putative beneficiaries are homeowners, who may be able to negotiate their monthly payments down to less than 30% of their monthly incomes. But it is the lenders who will cash in, if the Obama plan works.<\/p>\n

How’s that? Obama is hoping to shove a floor under still-declining home prices. Lenders will take a hit on millions of reformulated mortgages, but the hope is that this will save them even more money, in the long run, by stemming the rising tide of foreclosures.<\/p>\n

In other words, the Obama plan is a price-support scheme. The market argues right now that homes are overpriced — which in turn suggests that the available supply of homes substantially exceeds existing demand.<\/p>\n

That’s important. Prices for premium-quality homes are very low, and interest rates are still hovering at historic lows. Mortgage money is easily available to owner-occupants, and Fannie Mae just loosened its standards for rental-home investors. Even so, the number of homes being offered for sale at current prices still exceeds the number of buyers willing to pay those prices.<\/p>\n

In reality, prices need to continue to drop until demand matches or eclipses supply. It wouldn’t hurt to convert some housing to other uses, or simply to tear it down altogether.<\/p>\n

But forcing an arbitrary floor under prices is unlikely to have happy consequences. Despite his rhetoric, Obama’s plan can only reward our economy’s wasteful grasshoppers, at the expense of its thrifty ants. A price-support will serve to delay recovery, since it will do nothing to solve the supply and demand problem. And, as the worst of all foreseeable consequences, a price-support plus the $8,000 tax credit from last week’s stimulus bill could Read more<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

This is my column for this week from the Arizona Republic (permanent link).  Obama’s housing rescue plan won’t rescue housing, but it will delay the eventual recovery of the real estate market President Barrack Obama came to Mesa Wednesday to announce his new housing initiative. The location made for good political theater, given that metropolitan […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[251,26,6,5],"tags":[],"class_list":{"0":"post-7018","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-big-mother","7":"category-lending","8":"category-marketing","9":"category-real-estate","11":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":6950,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/6950\/the-bad-news-obamas-housing-relief-plan-is-a-giveaway-to-lenders-not-homeowners-the-worse-news-it-wont-work-anyway\/","url_meta":{"origin":7018,"position":0},"title":"The bad news: Obama’s housing relief plan is a giveaway to lenders, not homeowners. The worse news: It won’t work, anyway.","author":"Greg Swann","date":"February 19, 2009","format":false,"excerpt":"If you read the news this morning, you'll find Realtors all over the country rejoicing that President Obama has surged into the depressed real estate market on a white charger, bearing with him an heroic plan to rescue everyone -- borrowers, lenders and especially Realtors. No discouraging words? To the\u2026","rel":"","context":"In "Big Mother"","block_context":{"text":"Big Mother","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/big-mother\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":5485,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/5485\/how-the-new-president-is-going-to-prolong-the-housing-bust\/","url_meta":{"origin":7018,"position":1},"title":"How the new president is going to prolong the housing bust","author":"Greg Swann","date":"November 10, 2008","format":false,"excerpt":"This is my column for this week from the Arizona Republic (permanent link). \u00a0How the new president is going to prolong the housing bust I'm writing this before the election, so I don't know who will have won by the time you read this. But here's something I do know:\u2026","rel":"","context":"In "Investment"","block_context":{"text":"Investment","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/investment\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":16298,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/16298\/apparently-insanity-is-buying-the-same-house-over-an-over-again-even-though-you-never-qualify\/","url_meta":{"origin":7018,"position":2},"title":"Apparently, insanity is buying the same house over and over again, even though you never qualify.","author":"Greg Swann","date":"April 3, 2013","format":false,"excerpt":"You just can't make this shit up: Obama administration pushes banks to make home loans to people with weaker credit. Why not? It worked out so well the last time.The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an\u2026","rel":"","context":"In "Big Mother"","block_context":{"text":"Big Mother","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/big-mother\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":7211,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/7211\/the-federal-governments-housing-casino-will-never-play-fair-as-long-as-there-are-votes-to-be-bought-by-cheating\/","url_meta":{"origin":7018,"position":3},"title":"The federal government’s housing casino will never play fair as long as there are votes to be bought by cheating","author":"Greg Swann","date":"February 28, 2009","format":false,"excerpt":"This is my column for this week from the Arizona Republic (permanent link). Since I wrote this on Tuesday, events have overtaken some details, but it remains that few if any borrowers in the Phoenix area will be able to renegotiate or modify their loans under the Obama plan. Everyone\u2026","rel":"","context":"In "Big Mother"","block_context":{"text":"Big Mother","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/big-mother\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":13281,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/13281\/the-good-news-in-the-housing-market-we-may-be-witnessing-the-beginning-of-the-end-of-the-bad-news-in-the-housing-market\/","url_meta":{"origin":7018,"position":4},"title":"The good news in the housing market? We may be witnessing the beginning of the end of the bad news in the housing market.","author":"Greg Swann","date":"September 20, 2010","format":false,"excerpt":"From The New York Post:The latest numbers suggest we're finally at the beginning of the end of the housing correction -- no thanks to Washington. Last Thursday's numbers from Realtytrac seemed like bad news. In August, foreclosure auctions hit their second-highest monthly total in the report's history: 147,003, up 9\u2026","rel":"","context":"In "Flourishing"","block_context":{"text":"Flourishing","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/flourishing\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":12853,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/12853\/the-line-for-food-stamps-is-over-there-this-is-the-line-for-deficit-funded-mortgage-bailouts\/","url_meta":{"origin":7018,"position":5},"title":"The line for food stamps is over there. This is the line for deficit-funded mortgage bailouts.","author":"Greg Swann","date":"August 5, 2010","format":false,"excerpt":"James Pethokoukis at Reuters:Main Street may be about to get its own gigantic bailout. Rumors are running wild from Washington to Wall Street that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans\u2026","rel":"","context":"In "Big Mother"","block_context":{"text":"Big Mother","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/big-mother\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/7018","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/comments?post=7018"}],"version-history":[{"count":1,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/7018\/revisions"}],"predecessor-version":[{"id":7019,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/7018\/revisions\/7019"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=7018"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=7018"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=7018"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}