Real Estate Stimulus Fail

August 24, 2010 by  
Filed under Economics

For two years I’ve preached that artificial means to prop up an inflated real estate market are not permanent solutions. Obama and his economic advisors (who are gradually jumping ship) thought otherwise. Can you guess where this is going?

After flooding our economy with billions in home buyer tax credits and “honk if I’m paying your mortgage” rescue plans, the market has spoken.

Sales of existing homes have hit a 15 year low. (Source)  Sales fell more than 27% since June.

This is awful.

Keep in mind that these dismal sales numbers coincide with record low mortgage interest rates, which should be stimulating buyers.

There are two lessons to be learned here.

First, our government is powerless to effectively re-direct our economy. Bush and his sequence of Republican then Democrat Congressional jack-asses drove it off the cliff. The Obama team is keeping us there.

Second, if you have a Ph.D. and your field is economics, don’t waste my time with your tax credits, bailouts, rescues, and other stupid strategies. I’m better off with a Ouija board.

Now, if you have always wanted a condo in Florida that costs less than a new car, this is your time.


Feed Mr. ToughMoneyLove

FREE UPDATES: If you enjoyed this, please subscribe to receive the newest hard truth from Mr. ToughMoneyLove automatically by RSS feed (what is RSS?) or by spam-free Email.

Share
  • Banner

Comments

6 Responses to “Real Estate Stimulus Fail”
  1. Jack Clark says:

    Great story about the Florida condos.

    So when will you be letting your loyal readers know when the move date is for you and Mrs. TML?

    (The Ouija board comment was damn funny too.)

  2. Another Reader says:

    The tax credits merely pushed the demand forward. We are living with the results of that now.

    The other problems are unemployment (and fear of same) and the total lack of interest on the part of the banks in loaning money. The regulators aren’t making it any easier to clear the market either by excluding most serious investors from the market with the 4 and 10 property restrictions. Offer me and my fellow professional investors financing with reasonable rates and terms and I can guarantee we will absorb a huge chunk of the existing inventory and clear the overhang in a hurry. Then we can get to the business of transferring the remainder of the inventory via foreclosures and short sales.

    A lot of the folks in those properties need to rent for awhile and recover from their mistakes. In many markets we need a lot more rentals to accommodate them. Allowing investors to buy at prices and terms that create cash flow means more affordable housing that will be well maintained.

  3. MasterPo says:

    People have gotten past their fear – into abject panic!

    Republican win in November is symbolic at best. They won’t have the votes to override an Obama veto. And that’s presuming they govern conservatively and remain united in all matters (I won’t be calling Vegas for odds).

    At best we can stem the tide for awhile. Maybe.

    I fear as a nation we are past the point of safe return to what we used to call normality just 10-15 years ago.

    Hope everyone bought some gold when I said so.

    Now stock up on food.
    Canned, dried, freeze dried.
    Shortages are coming sooner than you think.
    And unlike the Russian gov, this administration will NOT put hungry Americans first!

    Heaven help us.

  4. Rick Beagle says:

    “Now stock up on food.
    Canned, dried, freeze dried.
    Shortages are coming sooner than you think.
    And unlike the Russian gov, this administration will NOT put hungry Americans first!”

    ^^ You have lost your bloody mind.

    In so far as this story is concerned, there are two factors that bear consideration: 1) the sale is over (ie the incentives), and 2) the job market is still in the toilet. The numbers will stabilize over the next few months, but without a better job report, don’t expect it to be get much better.

    Peace.
    Rick Beagle

  5. MasterPo says:

    Ricky – Time will tell. Hope I’m wrong. Really. And if I am, what’s the worst that happens? You have enough on hand for a really good party!

    But if I’m right…

    BTW, I was at the Restoring Honor Ralley this weekend and thought of you. :-)

    • Rick Beagle says:

      “Time will tell. Hope I’m wrong. Really. And if I am, what’s the worst that happens?”

      What’s wrong with this? This is classic fear politics, and scared people make truly stupendously stupid mistakes. Add racist elements and overt controlling propaganda into the mix, and you get a truly scary group (think brown shirts).

      I replied in the other thread about your trip to see Beck and friends. You know where I stand on his views, but that aside, I honestly hope you had a good time.

      Peace.
      Rick Beagle

Speak Your Mind

Please leave a comment and tell us your version of the hard truth...

You must be logged in to post a comment.