The Fed’s annoucement of buying longer-term treasuries is a nothing-burger for housing. Any benefit of lower mortgage rates will be scooped up by the lenders, not us. You might see an occasional high-3% offering, but is it even necessary?
I don’t think so, buyers are happy with the prospects of 4% mortgage rates.
The Fed/Gov needs to address consumer confidence, and none of these multi-billion dollar T-sprees are going to change how people feel about buying a house. They should do something for the folks who pay their bills on-time, save money in spite of 0% interest, and allow politicians to live cushy livestyles.
What can they do?
1. Ramp up foreclosures.
Don’t just issue a few extra NODs, let’s get down to business. Fannie/Freddie owns the most REOs, and the Fed/Gov pulls their strings. Let’s blow out sxome real volume, and show America that the government is about doing what’s right, for a change.
I am a REO listing agent for Fannie Mae, and not much is coming my way. This month I receives two more assignments, after a 6-week dry spell. Another 2-bedroom house in City Heights that was in short-sale limbo with a buyer who would have paid more than I’ll get for it. The other is a National City triplex clouded with title issues that will take months, if not years, to resolve.
The powers that be fear that more foreclosures would mean lower prices, why don’t they consider the disgust they are causing with buyers? The erosion of consumer confidence in our leaders is more damaging to the real estate market than expediting the foreclosure process – because plenty of buyers are going to wait this out until the shenanigans are done (chime in if you are one of those!).
The foreclosures are going to happen anyway, it’s just a matter of time – let’s have some market clearing and cause consumer to have more confidence in our leaders!
2. Declare a specific exit strategy from the mortgage market.
The Fed/Gov may not get out altogether, but whatever the policy is, put it on the table and let’s go. Private lenders aren’y going to surface until there is a need. There is no need if the government policy is to coddle the mortgage market.
3. Make decisons
Make specific policy about 1) allowing foreigners with means to emigrate if they buy a house, 2) MID, 3) increase/decrease capital-gains tax, 4) putting the Tan Man in jail.
If people sensed that there was clarity and direction in government policy, they’d be more likely to take positive action. With today’s psuedo-policy, people just want to put their dough in jars and bury it in the backyard.
The definition of leadership is ‘demonstrating the ability to lead’. Now is the time.