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.
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.
Yeah, the DC market will stay high, thanks to all the govt jobs paying huge salaries for doing NOTHING!
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. (?)
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.
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.
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?)
Obama could give free houses away with cellphones, and first in line to sign up get a lifetime free supply of condoms.
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?
Already happening in NJ & NY.
Also happening in Detroit & Cleveland.
Housing market? We’ve got a housing market? Who knew?
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.
The government is financing foreclosures for people who lost their homes due to foreclosure.
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
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!!
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!
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%.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.