Posted on 02/14/2010 8:01:50 PM PST by reaganaut1
ELKHART, Ind. — Over the next six months, the federal government plans to wind down many of its emergency programs for housing. Then it will become clear if the market can function on its own.
People here are pretty sure the answer will be no.
President Obama has traveled twice to this beleaguered manufacturing city to spotlight the government’s economic stimulus program. The employment picture here has indeed begun to improve over the last nine months.
But Elkhart also symbolizes the failure of federal efforts to turn around the housing slump at the heart of the economic crisis. Housing in this community has become almost entirely dependent on a string of federal support programs, which are nonetheless failing to prevent a fall in prices and a rise in mortgage delinquencies.
More than one in 10 mortgage holders in Elkhart is seriously behind on payments. The median sales price has plunged to the level of a decade ago. Many homeowners owe more than their home is worth, freezing them in place for years. Foreclosures recently hit a record.
To the extent that the real estate market is functioning at all, people here say, it is doing so only because of the emergency programs, which have pushed down interest rates on mortgages and offered buyers a substantial tax credit.
Equally important is an expanded mortgage insurance program run by the Federal Housing Administration, which encourages private lenders to accept borrowers with small down payments. The government takes the risk of default.
A few years ago, only one in 10 buyers in Elkhart used the housing agency program. Now about half do. Across the country, the agency has greatly expanded its reach so that it now insures six million mortgages.
(Excerpt) Read more at nytimes.com ...
Let the housing bubble burst once and for all and let’s get housing prices in line with their true market values. We’ve wasted far too much tax dollars propping up bad mortgages.
Agreed. As a tax payer I tire of both paying for ‘affordable housing’ and paying people to stay in what turned out to be their ‘unaffordable housing.’
Now if I can only figure out why someone would want to go to these places on a high speed train...
Lop off about 50% of the market value from 2006 prices then you'll finally pull into the pit with that "true market value".
This is true. It's a hot potato issue Barry hopes to run the clock out on at least till his "second" administration.
As sickly as real estate values have been, they have been prevented from totally tanking through artificial respiration. Left to its own devices - without government subsidizing - values would indeed plunge further into the abyss.
Most foreclosure haven't even entered the market.
More foreclosures are on the horizon as ARMs reset. So, what are we getting long-term from all of this artificial propping up of the real estate market? Let’s take our medicine now rather than bury our heads in the sand and continuing with this nonsense. BTW, not every part of the country has experienced grossly inflated real estate values like Ca, AZ, FL, and NV.
Crash land this fat turkey? Naah, too messy as one giant "SPLAT!" Better off soft-cushioning the blow of another round of rampant foreclosures.
Problem is I don't even think any "bottom" would actually wind up as "the bottom." There's a Marianas Trench still in hiding.
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