Earlier today we looked at how the housing market is teetering atop artificially created price levels engineered through bailout and stimulus. Now, we turn our attention to the official evidence of it. In its latest Quarterly Report to Congress (pdf), the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) documents how, “Supporting home prices is an explicit policy goal of the Government.”
According to Tracy Alloway at the Financial Times:
“…propping up house prices is now an explicit goal of the US government… So explicit in fact, that the Special Inspector General for the Troubled Asset Relief Program has knocked up this little chart to show how various policy programmes (Hamp, MHA, etc.) lead to higher houseprices:”
Alloway goes on to cite the SIGTARP report:
“Supporting home prices is an explicit policy goal of the Government. As the White House stated in the announcement of HAMP for example, ‘President Obama’s programs to prevent foreclosures will help bolster home prices.'”
It’s pretty tough to see how the housing market can reach the kind of equilibrium price levels that will support a sustainable recovery with this unabashed government intervention. When the policy support goes away, which because of its cost it eventually must, the second leg down in housing is likely to follow in short order.
See Alloway’s complete post in Financial Times Alphaville coverage of the US housing bubble v2.0.
Rocky Vega is publisher of Agora Financial International, where he advances the growth of Agora Financial publishing enterprises outside of the US. Previously, he was publisher of The Daily Reckoning, and founding publisher of both UrbanTurf and RFID Update -- which he ran from Brazil, Chile, and Puerto Rico -- as well as associate publisher of FierceFinance. Rocky has an honors MS from the Stockholm School of Economics and an honors BA from Harvard University, where he served on the board of directors for Let?s Go Publications, Harvard Student Agencies, and The Harvard Advocate.
As someone who bought a house in February of 2006, I certainly hope so.
great post as usual!
My friend recently lost their home to foreclosure and now they are planning to file for bankcrupcy. They recently went to file their taxes and they found out IRS is billing them 52,000 for abandonment even though they have tried for months asking for help from the banks. Need some advise on how i can help guide my friend to the right people to settle the foreclosures.
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