How many times do we hear the economy is in recovery? How many times do we hear the housing market has bottomed and is in recovery? How many times do we believe this to be true?
Owning a home has in the past been referred to as the American Dream. A place of your own that grew in value over time. We were taught over time our home would become a nest egg. The biggest investment of the middle class.
But a system that worked beautifully for generations changed overnight with the housing collapse. Trillions of dollars of home equity vanished overnight.
There is a historic lesson in the housing collapse, central planning by government caused this disaster. The market left free of their meddling and we wouldn’t have had a meltdown.
Here we are today and the NAR is aptly running ads sharing that the dream of homeownership is in jeopardy. They are correct however don’t go far enough in my opinion. They should be sharing why. This would enhance the credibility of the industry that failed to sound the alarm bells during the housing bubble.
Instead we hear any glimmer of good news as signs of recovery when there has been no recovery which is obvious to people living on main street. Truth is record low interest rates are the reason housing has a heartbeat.
The dream of home ownership is in jeopardy due to continued central planners interfering with the private sector. Specifically the big government agenda of the Obama administration preventing business from expanding and creating jobs.
The housing market will not have a sustainable recovery until the labor market recovers. All but impossible due to the Obama agenda. The big three obstacles to growth are taxes, leviathan laws (Obamacare, Dodd Frank), and energy costs. Unlike the congress and president who haven’t passed a budget in excess of 1200 days, businesses do budget.
Obama the immovable ideologue standing firm on these three critical issues makes it impossible for businesses to grow. Hence no jobs through growth helping the housing market.
Then there’s the Federal Reserve repeating past mistakes by holding interest rates too low too long, tripling the money supply, monetizing debt all devaluing the dollar. Remember these days of two and three percent home loans, because in the near future they will only be a memory.
When rates increase without job growth, housing will tumble again.
Wall Street continues to call for QE3 from the Fed. QE1 and QE2 didn’t establish sustainable growth and neither will QE3. The Fed is out of bullets.
There is no recovery of significance that can put millions back to work because the Fed is impotent, while the Obama administration believes they are omnipotent.