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We have already discussed how the rule changes that made the 2006 era, the requirement for obtaining a mortgage, was you had to be breathing regular. This easy "mortgage" everybody qualify, brought about an unprecedented boom in homes sales and a rapidly advancing price that made owning a home and then reselling it in a few months, was a money maker that "beat working." The more that made money owning a home, and cashing in, the more others wanted to not miss out and with an easy to obtain mortgage, they too bought in. Eventually the price got so high that only a few or investors could swing the payments. |
Then it leveled off and the bubble burst as the word got out, dump your house the prices are going down. This collapse of the house of cards, brought down many financial institutions, who had bought in big time and recession rolled in followed with unemployment, underemployment and "past due" mortgage payments.
You all know this story, we have already mentioned this whole house of cards was set up by a governmental screw up in mortgage regulation and we wont go into it. Stupid Policy One, Free and Too Easy Mortgages, Result Runaway Prices.
Stupid Current Policy, Over Reaction
Totally Eliminate Mortgages For 40% Of Market Buyers, (*investors) The Other 60% Tighten It So Only the few Rock Solid "Owner Occupied" Payers Get Mortgages.
Those few qualified, who were going to buy with the much lowered prices, anyway, were then given an $8,000 present from the taxpayers. Not during the sale, after the sale credit filing and reports are 100,000 of those now being investigated by IRS as fraudulent.
This give away made little impression, the "impossible" tightened mortgage regulations and refinancing restrictions all but killed it.
Result, Cut Buyers In Half, on top of the previous mentioned With the Doubling Of Inventory At "Must Sell Prices" has all but destroyed home values.
Soon the only participants, the big rollers with all cash. This the result Of Lowering Home Values by Ruining The Market with No Refinancing Since Equity Has Been Destroyed, No Selling To Pay Clear Mortgage, No optimism about rising prices, no "buy now" fever.
Con census, even if you have cash, stay out, the whole thing is collapsing. Which brings about the very thing feared.
What we have bring up is the one no one seems to mention at all, (angels fear to tread) how the current government stupid policy's overacting to the "Fix:" the "no more bubbles" has done exactly that, it has also all but eliminated the possibility of the real estate market EVER returning to normal operation unless corrected.
The 40% of the market, folks with a few bucks in their mattress that decide this looks like a good time to invest in real estate, locked out of mortgages.
The traditional Investors, the politicians now blame these folks for the bubble, speculators, flippers, vacation homes investors, all got financing and ran the prices up. (will not take credit for a governmental screw up...have to blame somebody)
We lock those villains out, this time they say, no money for flippers, or speculators and they are right, that keeps prices down.
To see how well their formula is working, despite billions of tax payer money, watch, their now "overly tight" mortgage policy will have succeeded in driving real estate prices EVEN LOWER.
We invite you to Check again next month, and the month or year after that.
See if we are not correct, they are down a third to a half and you have only seen the start.
