Fed Governor Elizabeth Duke gave a speech today which I insist you read. It has to do with attempting to correct the housing market.
This speech is pertinent to me for two reasons which stem from her primary suggestion on how to approach stabilizing the housing market.
That primary suggestion is fairly simple; she wants government institutions like Fannie or Freddie to start renting their foreclosed properties, as opposed to selling them.
The affect such a policy could potentially have is startling. First, remember that much of the debilitating action of home prices has come from fire sales of assets in otherwise well to do neighborhoods. By simply restricting those fire sales, the property value of specific neighborhoods could potentially rise dramatically.
The sudden removal of fire sale assets would force much of the population interested in buying to compete over a smaller number of homes.
However it is the second primary affect that concerns me more. By suddenly having two massive competitors in the rental market, rental rates and occupancies on other operations could be forced noticeably lower.
Sure people may not be interested in owning a home. But imagine if someone about to lose there’s could just start renting it. You were living in a 3500 s.f. brick palace? Stay there. And your new rent will be $800 a month.
After all, we’re the government.
Imagine what that could potentially do to me, when I’m banking on the well to do moving into comfortable Class A apartment complexes for $1500 a month?
As I have a large amount of my holdings tied up in two rental operations, such an act would be akin to a declaration of war by the federal government.
Thankfully such a policy could not be implemented quickly or in a controlled manner. But still, I must keep an eye on this.
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thanks man. great stuff
Very interesting!
just think presidential towers right after the fourth building was put up,then valerie jarret walked in. the government,one big landlord. oh,and if you cant afford that nice home that the last tenant paid 1300 a month for…….no problem,will “make” hud turn that house into section 8 and the government will send you a check for rent.then you can turn around, and pay the government landlord your rent money…….or is that, cash the check and buy a 60″‘ samsung and a bag of chips and not send in the money for rent……opps..did i say that…..
Man the battleships, Cain
Send troops to the frontline
Cocksuckers think you can march into my house and steal my banana nut bread!? IT’S MY FUCKING BREAD, YOU INTRANSIGENTS!
Prepare weapons defense systems
Defcon 2 (or something like that)
By no means did I mean to insinuate success on the matter of this bill.. I just couldn’t help myself..
Lol
Yeah it made me pause and go for a walk.
I’m just going to hold AEC and CLP; they’re best of breed. Maybe scale back at most.
Sucks to be an AIV though, if the feds start renting their empty houses.
My only thought has been why this is not being discussed more. The other option being thrown around by some in the know, is the shared appreciation mortgage. In that case the lender refi’s the underwater mortgage, and takes an equity position on a share of any appreciation on the property when it is resold to cover the write down on the debt side.
I’d be very open to that idea; it would definitely ease the willingness of businesses to refinance. Basically a free equity position in exchange for an act that will help make the borrower more stable.
And it give the lender incentive not to fire sale homes.
Actually Duke’s idea to rent spare capacity is a good idea too. It just would rain shit on my parade.
The thing that really pisses me off, is that there is no leadership from Washington on the subject. I’m sure the banks are hesitant to do it on their own, since they probably would immediately be accused of “stealing” the homeowner’s future equity appreciation.
Either of these ideas would start to unfreeze both the housing markets and the labor markets. No one in their right mind would try to move to a state with better employment opportunities (and possibly lower housing costs), if they might be saddled with a house that is slow to sell or requires a big haircut to move.
mr thaler,in response to your post on the news wire here on the site,i shoulda posted it here. but can be read there,which you should. and the last part from my water bill,had me and the old lady shaking our heads,it’s a new tax.
You couldn’t pay me to live in Chicago.
Could housing go wherever supply and demand takes it without bringing down the rest of the ecomony? That is, if the government backs totally out of it, would that blow up everything else? Is it necessary to kick the housing can down the road, or could it “re-set” fully?
I have no pity for the people who paid 500 K for a piece of crap down the street from me, simply because the market will now let them have waterfront for the same price.
I have no idea where we are.
It’s just as likely that banks, after staring death in the face from overexposure to housing last time, tripled down on their bet thinking prices had bottomed and hoping to make back all glory that was lost.
They’re stupid that way.
and thats the crux of the whole enchalada. i have no pity for the guy that has the same house as i,the person dies then the children that you’ve never seen all show up with dollar signs in their eyes and wants 500k. why is your house all the sudden worth 500k when all the rest that are equal are 329-340k. the problem that pisses me off to the nth degree is that the blind banks know damn well how much these houses are worth,but now dont want to bring,the “real mark to market” to where the price truly resides resides,they want to be paid.by the taxpayer on dishonest pricing models t hat were inflated by the “people” on the front line of this whole damn mess. and the next godamn real estate agent that tells me,”it wasnt are fault” i will choke. i have had more fucking arguments with real estate agents to the point that i want to beat them over the head with a fucking hammer. i came up with a solution while i was a poster at another site that i hung at,2 weeks later christina romer tried to run with it on an idea to help the situation,she was cast aside. she was cast aside because these banks dont want it fixed,like aig, they will be made whole at the expense of the taxpayer at 100 cents to the dollar. why do you think the likes of cramer and all the bobble heads at cnbc made it their job to constantly tell people to walk from their homes and turn in their keys to the bank…….everybody deserves what they get from this, especially the jackwagon real estate folks who havent made a dime in the last three years.this buds for you. assholes. you or any “can try” to shoot a hole in this statement, let me just say, you cant………………. carmine caputo, he’s in fresh produce,,,,,,luigi cantorelli, he’s in fresh produce, they both sell bananna’s, caputo sells them for 20 cents each but luigi,he has the grand pubaa of bannana’s,he tells me if i dont buy one of his,i will miss out on a once in a lifetime opportunity to ever taste one of these bananna’s that only get harvested once every 30 years. so i says to luigi, luigi,carmine is selling the “EXACT”same thing as you are.luigi says yea but this is once in a lifetime thing,but dont worry,will find you a bank that will make it easy for you,but dont tell carmine,because he thinks this bananna is just like his…………………………………….. to the banks…….find the real price to market from2001-2002,stop there and let the government “let” you right off the rest. all of this was, and has been dishonest conveyance from the get go,and if they wanted a legal leg to stand on,i am quite confident that the court system would embrace this,after all,it was all speculative dishonesty……….. now,go talk amongst yourselfs. you dont have to be a phd in economics from harvard yale or princeton to be a problem solver,it only takes one to fuck things up