"Housing Bailout Passed In July Making Little Progress" This is a headline taken from CNBC.com today.
I hate to sound so cynical, but why did anybody think that this "bailout" would work.
The government proposed that lenders write off loan balances without compensation. And this concept was the foundation behind the Housing and Economic Recovery Act of 2008?
Let's put it into perspective. You give somebody a loan for $250,000. They agree to pay you back over the next 30 years. Two years after giving them a loan that they signed for, they give you a call asking you if it would be ok if they only pay you $200,000 instead. How well is that conversation going to go over?
And the other key ingredient in this "Act", which is really what it was, an act, was the ban on down payment assistance programs for first time home buyers.
So let me understand, there are a lot of homes for sale, we need buyers to buy these homes, but let's go ahead and remove a component of these buyers anyway. How does this stabilize the housing market?
Exactly what do these components of the legislation have to do with housing and economic recovery?
My new book, "It's The Housing Market, Stupid!" which will be out in the middle of November proposes a real housing and economic stimulus plan.
For a sneak preview go to www.ItsTheHousingMarketStupid.com
You mean the first two stimulus plans didn't work?
Shocking.
The stimulus/rebate checks didn't save people from losing their homes?
The Housing and Economic Recovery Act isn't allowing the housing market and economy to recover?
Shocking.
The good news is that at least the word "housing" was in the 2nd piece of legislation that Congress passed, so they are catching on, a little slow, but they are getting there.
As I have said many times before, until the Government provides a real housing stimulus, they can continue to issue as many of the silly stimulus checks that they want. They are not going to help somebody that is losing their home or somebody that lost a job.
In my new book, "It's The Housing Market, Stupid!", I propose a bold plan to the fix the housing market and economy, by going straight to the source of the problem, that there is simply too many homes for sale and not enough demand for them.
In the meantime if you want a sneak preview of the book check out this site: www.HousingStimulusPlan.org
There is a great article on CNBC.com today about this new stimulus package. Here is one of my favorite quotes:
"There's a sense that if we don't do something about housing, we will end up throwing good money after bad," says Christopher Mayer, senior vice dean and professor of real estate at the Columbia Business School.
I could not have said it better myself. Do all you want to do with bailing out Wall St., it won't matter until you fix the housing market.
So I am in the process of finishing up my newest book, "It's The Housing Market, Stupid!" and in one of the chapters I talk about the events of August of 2007 as well as CNBC's Jim Cramer's reaction to the crisis in the secondary mortgage market where he calls St. Louis Federal Reserve Prseident William Poole "shameful."
Cramer is not always right, but he is going to tell you what he thinks. And this unvarnished honesty can be welcome in a world of spin doctors.
It is a really funny video clip that concludes with Cramer jokingly saying, "Just go buy some Washington Mutual and take that yield."
Over a year ago Cramer saw the train coming down the tracks that we are just now seeing. Frightening how dead on he was.
Here is a link to the video: http://www.youtube.com/watch?v=SWksEJQEYVU
I have been talking about this for a while now, the train coming down the tracks - job losses, and how it is going to affect the housing market.
The government is still way behind the curve on this thing and they have been for over a year. Late to identify that there is a problem, slow to react to the problem, and ineffective in their response.
In a recent article on CNBC, General Motors, PepsiCo, as well as the state of Massachusetts, plan to cut more than 8,000 jobs between them.
Best Buy plans to cut more than 10,000 seasonal jobs.
A recent survey of CFOs found that 56% plan to reduce payrolls over the next year.
These job cuts are going to further exacerbate the already fragile national housing market. And this of course assumes mortgage rates don't increase.
The monetary tools that the Fed has at their disposal are not working. This is a problem that is going to require a fiscal solution.
What this comes down to is the fact that until the housing market can get some traction, and get the excess supply of homes absorbed, the economy will ultimately continue to contract. Housing is the engine of this country and right now the engine is stalled.
So I get an email from NAR President Richard Gaylord a couple of days ago talking about NAR's 4-point housing stimulus plan.
I like Richard, but I believe the 4-point stimulus plan comes up short. Kind of like an air ball.
He proposes four things.
1. Remove the requirement in the current law that first-time homebuyers repay the $7,500 tax credit, and expand the tax credit to apply not only to first-time buyers but also to all buyers of a primary residence.
**This whole $7,500 tax credit is a farce. Congress takes away DPA and in lieu of helping first time homeowners purchase a home, they opt to instead "reward" those who can do so without DPA. Here is something to think about, the issue is not that first time home buyers don't want to buy, its that they can't get a loan. Dangling a carrot in front of a person with no downpayment money doesn't help anybody. What NAR should have proposed is to have this $7,500 tax credit apply to investment real estate. Give an incentive to somebody that has the capital, that can qualify for a loan, but opts to sit on the sidelines. We need new demand for real estate in this market. This tax credit does not provide this much needed stimulus.
2. Revise the FHA, Fannie Mae and Freddie Mac 2008 stimulus loan limit increases to make them permanent. The Economic Stabilization Act, enacted in February, made loan limit increases temporary, and subsequent legislation reduced the loan limits and made them permanent. This has broad implication for homebuyers in high cost areas.
**Ok, this is a good idea, I agree. But again, it doesn't address the fundamental concern with this real estate market and that is that we need new demand for real estate, investment demand for real estate. The new loan limits may allow people to refinance, but is it going to have people rushing out of their apartment to go buy a home for $729,000? Does it stimulate investment demand for real estate? Nothing happens until a buyer/investor enters the market at the entry level price point. Until this happens, nobody can move up in value. The first time home buyer and investor is what faciliates real estate sales at all price points. Higher loan limits are great for refinancing, but it does not address the systemic need for new demand.
3. Urge the government to use a portion of the allotted $700 billion that was provided to purchase mortgage-backed securities from banks to provide price stabilization for housing. The Treasury department should be required to use the newly enacted Troubled Assets Relief Program to push banks to:
• Extend credit down to Main Street, making credit more available to consumers and small businesses;
• Expedite the process for short sales;
• Expedite the resolution of banks' real estate owned (REOs) properties.
**This sounds great, but can you really force this type of action? Can you force a bank to hire more people to handle short sales and REO transactions? Can you mandate how many people they need to hire? This is more of a qualitative mandate, and qualitative is very difficult to manage and measure.
4. Make permanent the prohibition against banks entering real estate brokerage and management, further protecting consumers and the economy.
**NAR has been talking about this for years. I get this. But doesn't the real estate market have bigger concerns than prohibiting banks from entering real estate brokerage. We are dealing with bank failures, and THIS is a major point of NARs housing stimulus plan? How does this stimulate the actual real estate market?
President of Mark MacKenzie Real Estate Planning, a real estate research and investment services brokerage; author of "It's The Housing Market, Stupid!"
He's been featured as an "Innovator" by the Phoenix Business Journal and a "life-time advisor" by REALTOR Magazine.
Mark MacKenzie has contributed to articles in the Wall Street Journal, the Arizona Republic, national REALTOR Magazine, and he has a regular feature in Personal Real Estate Investor Magazine which is available in Borders & Barnes & Noble bookstores throughout the country.
Mark MacKenzie Real Estate Planning is a real estate research and investment services brokerage. They track local supply and demand trends for over 75 markets throughout the country.
Mark has written and published three books, "It's The Housing Market, Stupid!", "Marketopoly", which debuted on Amazon.com as the #1 real estate and investment book, as well as "The New Gold Rush - Real Estate".
It's The Housing Market, Stupid! is the name of Mark's latest book and economic policy that would stimulate investment demand for real estate and subsequently provide a back-stop to declining home values, foreclosures, and economic conditions.
The fiscal stimulus has its origins in the Tax Reform Act of 1986 as well as the Gulf Opportunity Zone Act of 2005. The policy would allow for more Americans to be eligible to receive greater tax benefits when investing in real estate. The result would be an increase demand for real estate, the excess supply of homes would be absorbed, Americans would receive a tax cut, and banks would be provided with a good source of new loans and income.
"Clearly demonstrates the author's thorough understanding of how tax law and legislation impacts the housing market. Little changes can make a huge difference and that's the very valid premise of this book. I think everyone who has ever considered themselves a real estate investor, or thought about being one should read this very important book."
Diane Kennedy CPA, Bestselling Author - Loopholes of the Rich
"What we need is incentive in the form of new found confidence in free enterprise and capitalism, not another bailout. Mark MacKenzie expertly illustrates the way out of the real estate depression is through renewed interest in investing in the most stable commodity since the 1930's - real estate."
Real Estate "Artist" Frank McKinney
5-time bestselling author, including Burst This! Frank McKinney's Bubble-Proof Real Estate Strategies and The Tap
"Refreshingly grounded in the fundamentals of impacting demand in today's housing market."
John Foltz, President - Realty Executives
"If you're looking for a real estate professional, someone who uses proven techniques and hard work to help you achieve your goals, then Mark is your man. From locating the property, securing financing, closing escrow, setting up property management, and beyond, Mark was right there with us. We often felt as if we were his only clients! Honesty, integrity, and dedication aren't easily found these days, but that's what Mark is all about!"
-Greg & Patty Spears
"Before we started using Mark MacKenzie a few years ago we always thought of real estate agents as a necessary evil, but he has completely changed our mindset. Since then he has become one of our biggest assets in our financial planning. Now, whenever we hear that any of our friends and family are making any sort of real estate decision we give Mark our highest recommendation. Each time we've been thanked and now Mark is one of their biggest assets too. He's not only been beneficial in our home buying but every stage in between. We feel tremendously blessed to have found someone like him at this early stage in our lives. His integrity, work ethic and friendship is something that we know we will enjoy in the many years to come."
-Clint & Kim Rowley
"I would like to express my sincere gratitude, respect and admiration I have for Mark, and his innate ability to assimilate and support my investment initiatives, on both a professional level and a personal level. Mark MacKenzie Real Estate Planning has provided me the means, I feel, to move forward with a plan to personal wealth and eventual financial security.
After contacting Mark initially, he understood my business /real estate plans, with the immediate focus to be on rental properties with positive monthly cash flow. This has been accomplished within the first few months, with an initial purchase of a rental, duplex home in Mustang, Oklahoma.
Mark worked diligently for months with the Sellers, Lender, and Property Management organizations to close the deal, as the properties were still under construction. The purchase of the property was contingent upon the properties being rented upon completion of construction. This provided the immediate cash flow, and not the typical initial vacancy with myself to carry the credit float.
I would like to add that Mark is always available via phone to answer questions or provide his Real Estate expertise. He was patient as he mentored me on many Real Estate disciplines. Where else can you find expert advice at no charge. I look forward to many successful, future real estate transactions with Mark MacKenzie Real Estate Planning."
-Timothy D. McManus
"We are very impressed with Mark's real estate knowledge in forecasting what markets he thinks are going to be a good investment. Over the past three years we have developed a great working relationship and have purchased three investment properties with Mark's tremendous help. His devotion in finding us exactly the right properties and giving us all the information we needed helped make our decisions and the buying process very comfortable and smooth. We appreciate his attention to detail and tireless work ethic and look forward to working with him on all our future real estate endeavors."
-Kurt & Kathy Dodge
"Mark's knowledge of Real Estate investing starategies has been a tremendous help to my wife and I. We are following the 10 year plan outlined in his book and are on our way to financial independance!"
-Jason & Danielle Bliss
"We recommend working with Mark to any buyer or seller. Whether you are a 1st time buyer, or a seasoned investor, Mark is an excellent listener, very knowledgeable about real estate, and will always put your needs first. We worked with Mark in purchasing an investment property in New Mexico, and plan on doing so again. Further, Mark will also help evaluate and advise you on how to achieve not only your short term, but long term real estate goals as well."
-Bryan & Kimberly Lynch
"We have known Mark now for several years. We have worked with him in the purchase of rental properties and continue to do so.
We have found his honesty and expertise to be unsurpassed. He has been of the utmost help to us and others we know. He is an extremely professional individual and takes excellent care of his clients. Mark is always easy to contact, immediately returns phone calls and provides superb real estate market information. We plan to continue to do business with him as we have great respect for his knowledge of the market.
One of the things that we truly appreciate about Mark is the way he looks at all of the real estate market information before we even start searching for a property. Once we have that information it is much easier to choose an area to invest in and feel confident about the purchase that we are making. We can later follow up on our investments by using Mark's web site to access current market information on each property we have purchased. The web site, with use of our password, shows pictures of our properties with a link to the property values which Mark updates quarterly. Mark is licensed in Arizona as well as other states which allows us the opportunity to invest in multiple markets.
We consider Mark to be more than just someone with whom we do business with. We now consider him a friend as well."
-Tim & Andrea Rattenbury
"My wife and I had talked about investing in real estate for a long time (years) but we just didn't know how to get started. We bought our first home in 1990 and it seemed like a nightmare. The ever changing figures, too many meetings and back and forth negotiating.
A couple of years ago we heard about Mark MacKenzie from a mutual friend. We contacted Mark and within 30 days we had purchased our first invesmtent property. Mark makes it easy and stress free that I can't wait to do it again.
Mark went so far as to walk the property for us and even set up a property manager. We gained more than an agent, we gained a friend.
Mark gained our trust, friendship, and lifelong investments. I still can't believe how easy and worry free Mark made our investment and the lengths he graciously went to just insure we were comfortable. We look forward to our next investment."
-Jay & Jeannette Giles
ActiveRain Corp. is not responsible for the accuracy of the site's content (which is written by members of the ActiveRain Real Estate Network) and does not endorse the views of the real estate agents, mortgage brokers, and others listed here.
Powered by the ActiveRain Real Estate Network
© 2009 ActiveRain Corp. All Rights Reserved
