State of the Housing Crisis

by Sal on February 11, 2010

in Economy,Politics

Although most people look at the current economic crisis as a financial crisis on Wall Street, the truth of the matter is that the crisis stemmed from an over-inflated housing market that became over-inflated due to government policy.  As we are looking to find signs of a recovery, we should look towards the real estate market and see what direction that is heading.  The news does not inspire confidence.  Although foreclosures are down in January, signs point to a new surge in foreclosures on the way.  The percentage of people who are late on payments in Novemeber of 2009 had doubled to 5.29% of mortgage-holders, up from 2.13% in November of 2008 when the crisis first took root.

Another ominous sign is the prediction that the commercial real estate market will be the next bubble to pop.  According to a congressional panel that was established to monitor the real estate market, it is widely expected that $1.3 trillion worth of commercial property will need to be refinanced this year because of upside-down mortgages, leading to bank losses between $200 and $300 billion.  It was the collapse of the commercial market that led to Japan’s lost decade, so a bubble pop of this kind will make the recession of ’08 and ’09 seem like small potatoes.  The Federal Government has done absolutely nothing to deal with this problem, and instead focused on a stimulus which hasn’t done anything, and ObamaCare.  The government needs to losen regulation, lighten the tax burden, and get out of the economy’s way so that the hard-working American people can get this country back on its feet.

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