At a recent housing crisis meeting in Washington, D.C., Sandra Pianalto, president of the Federal Reserve Bank of Cleveland, said something that investors have been saying for literally years now and that the federal government certainly did not want to hear: “no one-size-fits-all short term remedies [for the housing crisis] would work.” Pianalto went on to say that the nation’s housing market collapse was the result of a destructive cycle with many different facets that fed – and is feeding – on itself. Those facets include mortgage delinquencies, foreclosures, housing oversupply, depreciating prices and big losses on the parts of borrowers and financial institutions[1].
Pianalto said that the only way to break the cycle is with a “coordinated set of policies to target multiple points of the breakdown in the housing market,” specifically by finding better ways to implement the Neighborhood Stabilization Program and the Community Reinvestment Act. She believes that at this point it is the responsibility of whomever actually still owns properties – be they homeowners, lenders or community organizations – to maintain houses in such a way as to improve resale values and enhance communities.
It seems to me that this presentation is a perfect example of too little, too late. Now that the federal government is irrevocably tied up in the housing recovery – and largely involved in delaying it – finally someone has spoken up and said that massive social programs may not be the answer to the problem. I would frankly be happier if Pianalto had said that the government needed to get out of the recovery all together, though I think that is highly improbable and maybe even impossible. Do you agree that better maintenance of property is the key to housing price recovery, or do you think this view is simplistic?
Thank you for reading the Bryan Ellis Real Estate Letter! Your comments and questions are welcomed below.
[1] http://blogs.wsj.com/economics/2010/09/02/feds-pianalto-multiple-solutions-needed-for-housing-crisis/
While this is one small but important part of maintaining prices in any market, it is incredibly stupid to think this is anything other than a small band-aid for what is happening. I see this as a good illustration of the huge problem we have in this country with government and especially the hidden government, which the Federal Reserve is part of!
Because someone other than Teamsters and Long Shore men read this blog, I cannot say what really comes to mind reading what she said! So in more mellow language I will go on.
The number of choices for stabilizing the housing market or even the greater economy shrinks each day of Obama’s socialist agenda. Soon it will reset itself because the government can push things only so far out of kilter. I am at a point of not caring any more who started the mess and much more concerned about getting the destructive liberal policies placed in the trashcan and ridding ourselves of the idiots wanting to keep them in place or even worse make more. Which her statements are setting the groundwork for!
What I see in her words is a desire for the government to take even more control of the housing market and economy, with phrases like;” “coordinated set of policies to target multiple points of the breakdown in the housing market,” specifically by finding better ways to implement the Neighborhood Stabilization Program and the Community Reinvestment Act.”
This is just shorthand for putting government groups even more in charge of our lives!
Or this phrase; “She believes that at this point it is the responsibility of whomever actually still owns properties – be they homeowners, lenders or community organizations – to maintain houses in such a way as to improve resale values and enhance communities.”
One needs to ask, who is the largest holder of mortgages in the country at this time? Fannie, Freddie, HUD and the VA, so when you couple this with the statement of “community organizations”, I see a strong desire to further the government’s power and take even more home ownership away from private hands, and get even deeper into our pockets, because this is just early groundwork for more government involvement to bolster the housing market. It would sold to us as a good thing, which is needed for our recovery, just like TARP, the Stimulus, or the Bailouts!
How are those working for you?
So this is the tip of the iceberg in a new power play by this administration and something we should be scared as hell of hearing. After all when was the last time you saw a well taken care of Fannie, Freddie, HUD, VA foreclosure? Certainly not in my part of the country!
And if you think the local government is going to do a good job, look at Detroit for a great example of what the bulldozers are doing for improving the neighborhoods!
It’s always funny to watch a far right winger complain about govt screwing things up, after 8 years of Repub massive failure.
You remind me of an arsonist who lights a building on fire and then stands there yelling at the Fire Dept telling them they’re not doing it right and they’ll never get the fire out.
Well, were not voting you in as fire captain no matter how loud you yell.
It is too bad that government at all levels thinks it can do a better job of community redevelopment than can private sector investors. Community development agencies are allowed to buy homes cheaper, spend big bucks rehabbing them, and lose money selling them. Private investors have, for the most part, done a great job reshuffling inventory for lenders. In my neighborhood, dozens of homes have been acquired and re-habbed by private individuals.
They bought them at reasonable prices, fixed them up, and have been selling them outright and/or selling them on contract to buyers who lost their homes and credit, and are now re-establishing themselves thanks to those profiteering investors.
One question I have in the finger-pointing game: When is the average buyer upside-down in their homes? In my opinion, it is the day they closed on the house! With little or nothing down, most have nothing to lose when they take a hike. It is time to tell the politicians and the “lawyer lobby” to take a hike with them. They created the problem, now it is time to get out of the way!
Jim Parker
“Chris” you have nailed it. “Jay” children should be seen, not heard.
Left to the Obama Regime and their statist ruling class compadres throughout Washington, conditions in general, and the housing market in particular, will continue their downward spiral. Barney Frank, Chris Dodd, and the rest of the progressives, both Democrat and Republican, will make sure of it. Surely every ACORN worker is deserving of a government subsidized house in the burbs. Now that the government has taken control of the student loan business, surely we should underwrite the college education of anyone who wants to go, and allow them to benefit from subsidized home ownership to motivate them in their studies. Lastly, it would show the world how compassionate we are if we provided subsidized homes to any illegal aliens with “anchor babies”.
Sound absurd? Ten years ago I would have thought so, but no longer, as the goal is to transform America into a socialist paradise. It won’t work of course, but they’ll say it was only because they were impeded from doing even more. The enactment of Lib policies never produces the intended results, but it never seems to be due to policy deficiency, only because they didn’t get to do enough of it.
We have two election cycles, 2010 and 2012 to reverse course. If unsuccessful, kiss it all goodbye. America as we have known it will be no more. The press, the pundits, the entrenched operators of the Democrat and Republican machines, rail against the outsider candidates that have this year won primary elections. Normal, hardworking, productive, common sense Americans have at long last begun to get totally ticked off with the parties, no longer trust them, and are beginning to rise up in opposition. Will enough Americans get ticked off enough to get engaged in political life and DEMAND that the political obscenity is brought to a halt, with the concept of public service actually restored in public service? We shall see. But time is short.
Jay, what program are you hanging your hat on that Obama has got working so well? The 111 million dollars sent to California for 55 jobs? Or is it the stunning success of 9.6% unemployment and 17-20% underemployment we are currently experiencing?
Yes, that is much better than the 5.5% enemployment under Bush and the under 600 billion dollar deficit under Bush and a mixed party congress, compared to the over 1.4 Trillion dollar deficit of Obama and the Democratically controlled congress.
Boy can hardly wait for more of that kind of success. Oh don’t forget the huge success of Obama care and how the boost to everyone’s health care isurance payments that went up 10-30% this coming year.
Now that is success we can all count on!!
I, for one, am excited about the tea party extremists taking over the Repub party. It ensures that moderates will rule the day, America will reject extremism, and the voices of the far right will be marginalized once again. Obama will continue to repair all the damage done by the failed ideology of Reaganism and the economy will continue its recovery. Thank God for that.
My valued subscribers: Sometimes, there’s education in observing foolishness. Thus I approved the above comment for publication. You’ll note that this person states no facts whatsoever, preferring instead to use cliches, broad categorizations and name calling. If that’s the style of government that you prefer, I suggest you follow Jay’s ‘thinking’ and support the folks currently in control of the White House. Jay, and others who are more focused on ideology rather than results, would love for you to do so!. — Bryan Ellis