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In Obama's Second Term, What Will Happen to the Housing Market?
Townhall.com ^ | November 19, 2012 | Mark Calabria

Posted on 11/19/2012 7:24:16 AM PST by Kaslin

The most glaring absence during the hard-fought campaign between President Barack Obama and Mitt Romney was any offer of substance regarding the housing market. It was, after all, a housing bubble-driven financial crisis that helped propel Obama to victory in 2008 and recent improvements in the housing market that perhaps helped secure his re-election Tuesday night. So housing policy was always there, even if only in the background. What does the next four years likely hold for the housing market?

Well, Obama's victory means that Federal Reserve Chairman Ben Bernanke will keep his job, at least until the end of his term in 2014. That means the Fed's policy to hold interest rates at record lows will continue. While mortgage spreads over Treasuries have been elevated, mortgages overall will likely hover near historic lows over the next year, providing some upward pressure on housing prices.Regardless of who the election winner is, the primary driver of housing policy will be the housing market. With home prices recovering in many areas and foreclosures on a slow but steady decline— due in part to rising prices and an improving labor market — Obama is likely not to introduce new foreclosure prevention programs in his second term. With Republicans maintaining their control of the House, legislative efforts to force broad-based reductions in underwater mortgage balances are essentially dead. While re-tools of Obama's signature HAMP and HARP programs are likely, those will be modest. In many ways, I believe the White House is eager to put the foreclosure crisis behind them and move on. .author_pub2 a { float:right; margin: 10px 0 8px 8px; display:block; height: 142px; width: 110px; background: url(/people/pub_photos/calabria.jpg) no-repeat -110px 0; } .author_pub2a a { float:right; margin: 10px 0 8px 8px; display:block; height: 142px; width: 110px; background: url(/people/pub_photos/calabria.jpg) no-repeat 0 0; }

Mark A. Calabria is director of financial regulation studies at the Cato Institute.

More by Mark A. Calabria

With Obama's victory and modest Democrat gains in the Senate, the president will likely renew attempts to put in place key appointments. Among those are replacing Ed DeMarco, the Federal Housing Finance Agency's acting director. Not only will this appointment influence the modifications efforts (or lack thereof) of Fannie Mae and Freddie Mac, but it will also give the administration a larger voice in Congressional debates over the future of the government-backed mortgage giants. Given the significant differences between House Republicans, Senate Democrats and the White House on reform of Fannie and Freddie, both companies will likely still be in their conservatorship limbo at the end of Obama's second term.

The Senate is also likely to act on a permanent housing commissioner to administer the Federal Housing Administration. Such an appointment will become all the more critical, as, in my opinion, FHA will require some amount of taxpayer assistance in the years ahead. If such amounts exceed $10 billion, which I believe they will, then legislative reform of FHA becomes a strong possibility with a focus on reducing taxpayer losses.

Romney repeatedly spoke of tax reform with an emphasis on reducing deductions in order to lower rates. Despite a vocal minority within progressive circles calling for reducing the mortgage interest deduction and using the money for rental assistance, an Obama victory largely guarantees the continued existence of the mortgage interest deduction in its current form. One can almost hear the Realtors breathing a sigh of relief.

With Obama's re-election comes the likely permanence of the Dodd-Frank Act and its newly created Consumer Financial Protection Bureau. Once the battles over CFPB's existence die down, I believe bipartisan attention will shift to the agency's regulation of the mortgage market. Both Dodd-Frank's Qualified Residential Mortgage and Qualified Mortgage definitions have raised concern across the political spectrum. Whether it's a concern that low-income and minority families will be denied credit due to the restrictions of QRM/QM, or that the regulations will hold back the overall mortgage/housing market, a more substantial debate will begin, ultimately resulting in a softening of the provisions of QRM/QM.

Much of what I have discussed lies on the regulatory side of housing policy. To a large extent, the real action will remain there. Whoever was going to win was going to face some stark budget realties. With little chance of wholesale entitlement reform, discretionary spending will be squeezed. Federal assisted housing programs have their peak funding (in real terms) behind them. While the overall housing market will continue to gain momentum over the next four years, that momentum will be slow. The days of real double-digit house price appreciation are years away. Obama will not be riding a housing bubble nor will he be tasked with cleaning up another bust. That will have to wait for future administrations.

This article appeared in AOL News on November 7, 2012.


TOPICS: Business/Economy; Culture/Society; Editorial; Politics/Elections
KEYWORDS:

1 posted on 11/19/2012 7:24:22 AM PST by Kaslin
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To: Kaslin

Did you ever see “Pottersville” from “It’s a wonderful life?


2 posted on 11/19/2012 7:29:09 AM PST by Nachum (The List was hacked- www.nachumlist.com)
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To: Kaslin

Quite simple. To make a loan payment, you need a job. To make a large loan payment, you need a good paying job. If the number of jobs, especially good paying jobs is declining, stagnant or growing - then the number of potential buyers will do likewise.

With Obama unchained, the number of jobs will, I predict, decline or stagnate. Same with the housing market.

Of course, that will not be true of every area, but nationally, and this is what my current crystal ball says, that will be the trend.


3 posted on 11/19/2012 7:30:20 AM PST by Darteaus94025
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To: Kaslin

No worries, comrade! Soon the people will own the real property.


4 posted on 11/19/2012 7:31:43 AM PST by LucianOfSamasota (Tanstaafl - its not just for breakfast anymore...)
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To: Kaslin
Until the 8-10 million homes that are in default are foreclosed and sold off the crisis will remain and grow.
5 posted on 11/19/2012 7:32:28 AM PST by Hans
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To: Kaslin

‘Due in part to an improving labor market” Really? Where? This administration seems quite content with a stagnant labor market and GDP below 2%. If they are concerned they have no plans to improve them.


6 posted on 11/19/2012 7:34:01 AM PST by Blackirish
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To: Kaslin
There will be a building boom!


Spacious apartments!


7 posted on 11/19/2012 7:34:27 AM PST by COBOL2Java (The GOP-e said "Beat a Marxist with a Liberal!" What a colossal blunder.)
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To: Kaslin

Teh fact that the wealthy are able to purchase homes larger than they need, on the backs of the oppressed workers, is a good indication of how the housing market will go. Such a condition goes against social justice and basic fairness.

Add in Agenda 21 and the need to keep the population within urban areas and you see the whole picture.


8 posted on 11/19/2012 7:35:09 AM PST by DBrow
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To: Darteaus94025
Quite simple. To make a loan payment, you need a job.

Oh, contrair. Have you been following the news? It sounds like the Obama Administration is pushing for some relaxed lending rules to help spur the mortgage and residential realestate market. Sound familiar?

Specifically, they want fairness and have suggested that banks are discriminating against "low income" and "minority neighborhoods". Now does it sound familiar? No?

How about this. Freddie and Fannie will assume high risk mortgages under a special program if they can pass legislation to encourage banks to take higher rists? What about now?

We may be too stupid to govern ourselves as a nation anymore. We never learn.

9 posted on 11/19/2012 7:35:44 AM PST by Tenacious 1 (The Click-&-Paste Media exists & works in Utopia, riding unicorns & sniffing pixy dust.)
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To: Blackirish
This administration seems quite content with a stagnant labor market and GDP below 2%. If they are concerned they have no plans to improve them.

Why doesn't THIS media ever point out that our GDP, economy and employment growth is not even keeping up with population growth? They were very quick to jump on this and exagerate what growth needed to be in about 2002 as "Bush's Economy" started to boom. Remember, it was a "jobless" recovery? Only low wage jobs were comming back in Bush's economy. "We may have added 250,000 jobs, but they are lower paying jobs...." was the media reports.

I know the answer. Rhetorical question really.

10 posted on 11/19/2012 7:40:19 AM PST by Tenacious 1 (The Click-&-Paste Media exists & works in Utopia, riding unicorns & sniffing pixy dust.)
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To: Darteaus94025

“To make a loan payment, you need a job.”

To make a loan payment, you need a loan. To get a loan, you need a STABLE job AND an acceptable credit rating. If the loaning institutions are reputable, they won’t frivolously lend money to unqualified buyers. If unqualified buyers are not “buying” houses, then...... And if your job has questionable stability/longevity, then don’t be stupid and over-extend your debt capacity. IF Obama has this “dream” of granting home-ownership for everyone by raising taxes, then the bottom will fall out for all of us.


11 posted on 11/19/2012 7:43:14 AM PST by fivecatsandadog (Don't let reality ruin your day.)
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To: DBrow
Teh fact that the wealthy are able to purchase homes larger than they need, on the backs of the oppressed workers, is a good indication of how the housing market will go. Such a condition goes against social justice and basic fairness.

I think I missed something important here. Is there a sarcasm tag or something? What is agenda 21?

....Giving the benefit of the doubt and assuming I'm confused....

12 posted on 11/19/2012 7:43:51 AM PST by Tenacious 1 (The Click-&-Paste Media exists & works in Utopia, riding unicorns & sniffing pixy dust.)
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To: Darteaus94025
You're exactly right.

Further, a part of the premise of this article is incorrect. The housing market has not made recent improvements, as per a number of folks I know in real estate sales (and related industries) nationwide. Many of the positive stories the media promoted prior to the election appear to be nothing more than politics.

Added to this, the full implementation of Dodd/Frank is going to mean further restrictions on lenders which translates into even fewer sales.

13 posted on 11/19/2012 7:44:20 AM PST by Rational Thought
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To: Kaslin
There is a US population age distribution problem that Zero's "free abortions and birth control" policies make even worse. The historical US population age pyramid isn't a pyramid any more.


14 posted on 11/19/2012 7:45:44 AM PST by Sooth2222 ("Suppose you were an idiot. And suppose you were a member of congress. But I repeat myself." M.Twain)
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To: Tenacious 1

Obama will guarantee that any gains in the past 4 years will be nullified with perpetual stupidity.


15 posted on 11/19/2012 7:50:50 AM PST by fivecatsandadog (Don't let reality ruin your day.)
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To: Kaslin

“The most glaring absence during the hard-fought campaign between President Barack Obama and Mitt Romney was any offer of substance regarding the housing market.”

There was not much substance offered on *any* subject, except the firing of Big Bird. For example, why didn’t the GOP beat the commies senseless over the lack of a congressional budget for the past three years? Something is ROTTEN in DC, and 48% of the voters know it.


16 posted on 11/19/2012 8:00:53 AM PST by TexasRepublic (Socialism is the gospel of envy and the religion of thieves)
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To: Sooth2222
There is a US population age distribution problem that Zero's "free abortions and birth control" policies make even worse. The historical US population age pyramid isn't a pyramid any more.

It's a minaret...

17 posted on 11/19/2012 8:15:28 AM PST by null and void (America - Abducted by Aliens...)
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To: Kaslin

Well, let’s review....FHA is about to beg for more money; Fannie Mae and Freddie Mac are crippled by corruption; the major banks are holding a huge inventory of foreclosed loans - hoping to avoid a huge loss (good luck with that) that would be the result of dumping all of these homes on the market at once; unemployment remains high, and; businesses are issuing pink slips by the wagon load.

Sounds like a firm foundation for a housing boom to me!!


18 posted on 11/19/2012 8:28:10 AM PST by Donkey Odious ( Adapt, improvise, and overcome - now a motto for us all.)
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To: Kaslin

Maybe this guy would understand the “housing market” if he spoke of it in terms of being part of the economy, instead of treating it as if it is some isolated non-related sector.

Housing would sovle itself, it the economy would recover, which would only happen with LESS government and not more.


19 posted on 11/19/2012 8:37:52 AM PST by C. Edmund Wright ("WTF?: How Karl Rove and the Establishment Lost....Again")
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To: Kaslin

New Section 8 tenants moving in next-door to your $870,000 McMansion


20 posted on 11/19/2012 8:59:47 AM PST by Buckeye McFrog
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To: Darteaus94025

Yeah, the DC market will stay high, thanks to all the govt jobs paying huge salaries for doing NOTHING!


21 posted on 11/19/2012 9:00:29 AM PST by matginzac
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To: Tenacious 1

Didn’t Bernanke just say last week, that there seems to be a problem with lower percentages of minority mortgage applicants being approved for mortgages, so they need to take a look at how to make mortgages more easily available to minority applicants. (?)


22 posted on 11/19/2012 9:17:02 AM PST by NEMDF
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To: Tenacious 1

I didn’t think a tag was required, it’s basic Marxist economics based on “fairness”, class warfare and wealth distribution.

Agenda 21 is a “sustainability” program from teh UN that, among other things, calls for depopulation of rural areas and concentration of housing in urban areas near public transportation nodes. Apartments, condos, big multi-unit sustainable green housing. There is a lot about it on FR.


23 posted on 11/19/2012 9:29:28 AM PST by DBrow
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To: NEMDF
Didn’t Bernanke just say last week, that there seems to be a problem with lower percentages of minority mortgage applicants being approved for mortgages, so they need to take a look at how to make mortgages more easily available to minority applicants.

Exactly! He did say just that (not sure of exact quote).

Apparently nobody explained to him what really caused the cascading economic spiral we are now in.

24 posted on 11/19/2012 9:31:23 AM PST by Tenacious 1 (The Click-&-Paste Media exists & works in Utopia, riding unicorns & sniffing pixy dust.)
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To: Donkey Odious
Sounds like a firm foundation for a housing boom to me!!

LOL

Your perspective is all wrong. Think of all the jobs that could be created if we just start demolishing houses by the thousands. We could make it a law that a foreclosed home had to be levelled. Soon there would be a demand for more housing as more and more people were left homeless. Think of the money people would save if they didn't have to pay for a mortgage. Then there would be a huge demand for housing as people would want some place to live. More houses would get built and because there would be so many extra houses, they would be affordable. Hence, low and no income people could afford to pay on mortgages. The whole housing market problem would be fixed.

TA-DA! (is a tag needed here?)

25 posted on 11/19/2012 9:37:57 AM PST by Tenacious 1 (The Click-&-Paste Media exists & works in Utopia, riding unicorns & sniffing pixy dust.)
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To: Kaslin

Obama could give free houses away with cellphones, and first in line to sign up get a lifetime free supply of condoms.


26 posted on 11/19/2012 9:50:47 AM PST by pallis
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To: Tenacious 1

My apologies for such poor thinking on my part.....Your scenario is perfection. And, of course, the EPA would have to be involved to monitor the disposal of the asbestos and lead-based paint in the older homes. Just think of all the new jobs that alone would create!

Why do I keep seeing a vision of a whole nation of Detroits?


27 posted on 11/19/2012 10:24:22 AM PST by Donkey Odious ( Adapt, improvise, and overcome - now a motto for us all.)
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To: Tenacious 1

Already happening in NJ & NY.

Also happening in Detroit & Cleveland.


28 posted on 11/19/2012 10:26:56 AM PST by woodbutcher1963
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To: Kaslin

Housing market? We’ve got a housing market? Who knew?


29 posted on 11/19/2012 12:14:25 PM PST by jmacusa (Political correctness is cultural Marxism. I'm not a Marxist.)
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To: Tenacious 1

There was an article last week about 0bama’s second term racist agenda where he and Holder were going to pursue the doctrine of “disparate impact” and sue any institution that was involved in anything that affected minorities “disparately” in a negative way.

No word on studying the disparate racial representation of sports scholarships, professional basketball/football, etc, of course.


30 posted on 11/19/2012 12:18:53 PM PST by MrB (The difference between a Humanist and a Satanist - the latter admits whom he's working for)
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To: Kaslin

The government is financing foreclosures for people who lost their homes due to foreclosure.


31 posted on 11/19/2012 2:51:01 PM PST by Terry Mross (I haven't watched the news since the election. Someone ping me if anything big happens.)
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To: DBrow

City living affects your brain, researchers find

http://www.guardian.co.uk/science/2011/jun/22/city-living-afffects-brain

The part of the brain that senses danger becomes overactive in city-dwellers when they are under stress


32 posted on 11/20/2012 6:56:43 AM PST by 1010RD (First, Do No Harm)
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To: Tenacious 1
We could make it a law that a foreclosed home had to be levelled.

With the amount of completely trashed foreclosed homes out there, that might not be a bad idea. I have seen these foreclosed homes that were bought by former renters, they are worse than some of my rentals condition after a tenant moves out. Funny, Freddie and Fannie almost always fix up the homes so they can be sold. They are losing thousands in value and putting additional taxpayer monies into fixing them up? Astonishing!

There are $75-$100,000 fixers all over. Some are not that bad, the mortgage payment for a $75,000 home with 20% down at 3.525% interest over 30 years is less than $300 a month plus taxes and insurance. It is a tax shelter extraordinaire!!

33 posted on 11/20/2012 7:38:58 AM PST by thirst4truth (www.Believer.com)
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To: Kaslin
Actually, the next Housing bubble already began before Obama's first term. The reason we had the first one was that, although Barney Frank (head of the Finanacial Services Committee) was told that lending to higher-risk people was going to create havoc, he said (and you can Google the video) on Sep 25, 2003, "I want to roll the dice". Soooo... Banking rules were changed so that any banks that did not hand out enough housing loans to minorities would face stiff penalties. Loans were given to our beloved poor, loans were not paid back, the bad debts were bundled and re-bundled into many many assets, poisoning them all (or, as the Marxists love to say, "Socialized the risk"), and the huge snowball effect lost trillions for the US and for a large part of the globe.

Last year, our beloved Justice department started looking into CRIMINAL sanctions against bank heads who did not give out enough loans to minorities. (Before it was just money they'd lose, and the banks jumped so hard we all lost trillions. When it is the FReedom on the line, they'll jump even harder!!!)

It took 5 years for the bubble to grow and burst. Look for 2016 to this one to come crashing down once again.

Be prepared, Scouts!

34 posted on 11/20/2012 8:20:47 AM PST by Teacher317 ('Tis time to fear when tyrants seem to kiss.)
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To: Kaslin

1. Interest rates will temporarily hit below 3%, but interest rates will rise by end of year as the prime rate rises.

2. Unemployment will continue to be a problem such that banks no longer want to see a job but a job over six months duration.

3. Younger people will continue to not buy homes and live with parents or live together, decreasing demand.

4. Smaller, less expensive homes near office centers will be offered, forcing the current housing market to continue to see less demand.

5. Gas prices will continue to stay above $3/gallon, also creating demand for homes closer to work centers, decreasing demand on many subdivisions and rural areas. Apartments and condo will continue to see increasing demand.

6. Baby Boomers will continue to retire at a rate of 10,000 per day. Many were counting on higher home prices to fund their retirement. They will not see that investment pay off, forcing rural and expensive homes to continue to stagnate in price.

7. Banks by end of year will be hurting for business and will relax mortgage standards, however, Obama and his fellow Communists will create regulations to steer those relaxed standards into minority urban areas and out of suburban and rural areas.

8. Soviet style block buildings will become popular as they are cheap and offer an alternative to living with parents or others. Expect this idea to start within the end of year. It has been mentioned before.

9. The ObamaCare tax of 3.8% on the selling of a home will be extended to all home purchases and not just for “rich white racists”. This will kill housing sales as it places people 3.8% further under water and increases home prices by 3.8%. If a mortgage is $100k and the sale is $100k, that won’t do. The house sale must be for 3.8% more, $103.8k, to pay the tax and the mortgage loan.

10. Unemployment will continue to be a problem and curtail housing sales. Unemployment is at least 14% for primary income earners so housing sales will lag by that 14%.


35 posted on 11/20/2012 8:55:27 AM PST by CodeToad (Liberals are bloodsucking ticks. We need to light the matchstick to burn them off.)
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