Double Dip; should we try for trips?

Timothy Birdnow

Here it is; double dip!
http://click.bsftransmit2.com/ClickThru.aspx?pubids=6805%7c7610%7c628283%7c60228&digest=LInnHo6MIGT%2fkQCi5nlrig&sysid=1

S&P figures show a clear second dip in home prices late last year and into this year.

The stimulus, and the altering of mortgage terms was supposed to prevent this. Why didn't it?

I predicted this; what we did was artificially support the market by offering new terms, and by slowing down the pace of foreclosures to buy property owners time. With rock bottom interest rates and the banks holding so much bad debt there is no money to refinance, and the borrowers can't get enough to refi anyway because their property has lost so much value; they are underwater. What the government did was akin to grabbing a lone stone halfway down the cliff; it temporarily arrested our fall, guaranteeing we would pull that particular stone loose, fall the rest of the way, then have a landslide drop on top of us.

There are still a lot of properties in foreclosure that the banks haven't taken yet. I know; a number of our property management clients are waiting for the finalization of their foreclosures, and have been waiting for months. The banks aren't eager; they hope the borrowers can find some miraculous way out. They just can't figure out how to deal with another foreclosed property. But what can they do? These properties are worth a fraction of what they were just two years ago.

I know; my own home was reassessed, and dropped considerably in value. Doesn't bother me; I'll pay less in taxes. But the school district will bring in less, and that will mean a tax increase or the loss of accreditation - again. THaT wouldn't bother me overmuch, either; the school district is terrible, and won't get any worse by being unaccredited. I don't have any children using the service. But still, it won't end there; more taxes, new tricks up sleeves.

And the commercial market is out there, lurking like a lion in the tall grass. The real big money foreclosures will be the strip malls and other commercial properties that are mostly vacant as a result of the Obama economy.

Every business in America has to have space. The wealthy corporations can buy their own, and do so on the basis of need, but the small businesses - the backbone of America's prosperity - generally have to rent. If the strip malls go belly up the small businesses will see a narrowing field for their space, and while rents may go down these businesses will find their locations less convenient. Location is everything in many fields (restaurants, bars, etc.) and many good businesses will go under.

And every time one of those businesses fail there is a ripple effect as their employees go on unemployment or find only nominal work. They spend less, making for a weaker market for the other businesses.

HUD is STILL fighting to force banks to make subprime mortgages, it should be pointed out.
http://www.freerepublic.com/focus/f-news/2718401/posts

Folks, we have not hit bottom yet. I fear we won't, until the current crop of radicals is removed from the levers of power in Washington.