Government seeks ways to reduce housing surplus in 2009 !
With all the outrage at government over the loose handling of the Troubled Asset Relief Program (TARP) money, where after dispersing the first $ 290B to 19 different banks, mortgage rates went up ! More recently, the debacle of Government funding a request of $34B to save the "The Big 3" automakers left many on Main Street wondering. What about me?
After heavy persuasion from two huge lobbyist groups National Association of Realtors (NAR) and the National Association of Home Builders (NAHB), government knew it had to do something. Two weeks ago Government announced it would back stop through Freddie and Fannie, up to $600B in clean money. This resulted in mortgage rates dropping almost a full percentage point from 6.375 % to 5.5%, which in turn resulted in surge of refinance applications, but still only a small number of purchase applications. It was recently leaked that the Federal Reserve and Treasury Department are looking to offer 4.5 % mortgages for new and existing homes purchased. This leak has sparked a general optimism that Government hasn't forgotten about the guy in the street, and that direct action is underway. A couple other ideas being floated are a $ 7 500 tax credit for any house purchase, and trimming, or even axing altogether, the capital gains tax on housing for a period of time. Given that there are roughly 4.5 Million houses on the market in the US in general, the US Government is simply going to have to do something drastic to reduce the housing surplus ! We believe that if Government adopts all three of these steps, the housing market will soon bottom out, and stabilize.
As many have witnessed, the stock market has been difficult. Experienced investors and new-bees alike, many have taken their losses and gone into cash. Confidence is low. Given that there has been such tremendous hedge fund redemption, and that there is far more than normal cash sitting on the sidelines, that when Government brings into action a plan that Main Street can embrace, and confidence returns .... there will be a strong upward move.
If the Federal Reserve and the Treasury Dept are successful in implementing the plans mentioned above, then this will be the last opportunity for buyers to purchase homes at 70-75 cents on the dollar with great financing.
I want to thank you your support this year, and wish you a Merry Christmas, and a Happy New Year.
All the best,
Peter Slate R(S)
Haiku Properties
After heavy persuasion from two huge lobbyist groups National Association of Realtors (NAR) and the National Association of Home Builders (NAHB), government knew it had to do something. Two weeks ago Government announced it would back stop through Freddie and Fannie, up to $600B in clean money. This resulted in mortgage rates dropping almost a full percentage point from 6.375 % to 5.5%, which in turn resulted in surge of refinance applications, but still only a small number of purchase applications. It was recently leaked that the Federal Reserve and Treasury Department are looking to offer 4.5 % mortgages for new and existing homes purchased. This leak has sparked a general optimism that Government hasn't forgotten about the guy in the street, and that direct action is underway. A couple other ideas being floated are a $ 7 500 tax credit for any house purchase, and trimming, or even axing altogether, the capital gains tax on housing for a period of time. Given that there are roughly 4.5 Million houses on the market in the US in general, the US Government is simply going to have to do something drastic to reduce the housing surplus ! We believe that if Government adopts all three of these steps, the housing market will soon bottom out, and stabilize.
As many have witnessed, the stock market has been difficult. Experienced investors and new-bees alike, many have taken their losses and gone into cash. Confidence is low. Given that there has been such tremendous hedge fund redemption, and that there is far more than normal cash sitting on the sidelines, that when Government brings into action a plan that Main Street can embrace, and confidence returns .... there will be a strong upward move.
If the Federal Reserve and the Treasury Dept are successful in implementing the plans mentioned above, then this will be the last opportunity for buyers to purchase homes at 70-75 cents on the dollar with great financing.
I want to thank you your support this year, and wish you a Merry Christmas, and a Happy New Year.
All the best,
Peter Slate R(S)
Haiku Properties
posted by Peter Slate R(S) at
7:17 PM
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