Bailouts won’t stop drop in home prices
Bailout News, Politics, California Housing Crash, Florida Housing Crash, The Economy, Real Estate September 10th, 2008
The Federal government keeps bailing out the financial system and trying to artificially keep home prices high but long term, the market dictates what homes prices will be all around the country.
CNNMoney has this article:
Fannie, Freddie rescue won’t end housing woes
NEW YORK (CNNMoney.com) — The federal government’s takeover of Fannie Mae and Freddie Mac may save the battered real estate market from a complete meltdown. But financial experts say the bailout won’t lead to a housing recovery just yet.
Instead, some on Wall Street said the housing sector is in as tough shape today as it was before Sunday’s rescue by the Treasury Department.
“This isn’t curing the patient. This is preventing the patient from developing a new problem he can’t survive,” said Barry Ritholtz, CEO and director of equity research, Fusion IQ.
In particular, there is still a large supply of unsold homes on the market and an increasing number of foreclosures that threatens to add to the glut.
What’s more rising unemployment and increased job losses should add to the woes for lenders, brokers, builders and others tied to the housing sector.
“Now we have a recession,’” said Dean Baker, co-director of the Center for Economic and Policy Research.
Baker added that even with home prices declining at a rate not seen since the Great Depression, the housing bubble hasn’t completely deflated yet.
