Government Propping Up Real Estate

Off to Boston for a business meeting — but before heading to JFK, I had to toss up one more post on the various government interventions in Real Estate:

“Over the past year, the government has intervened heavily at essentially every stage of the home-buying process. In fact, more than 80% of the new residential mortgage loans made this year benefited from some form of government support, according to the trade publication Inside Mortgage Finance.

To keep funds flowing to the housing market, the government bailed out Fannie Mae and Freddie Mac last year and now effectively owns the mortgage finance giants and their combined $5.4 trillion in loan portfolios. To keep mortgage rates low, the Federal Reserve is on track to purchase nearly $1.5 trillion in debt issued or guaranteed by the government’s various mortgage arms and another $300 billion in Treasurys, which set the benchmark for home lending.

And to boost sales, the government also is offering $8,000 tax credits to first-time home buyers.”

And, it does not appear there is any end in sight any time soon.

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Source:
No Easy Exit for Government as Housing Market’s Savior
JON HILSENRATH and DEBORAH SOLOMON
WSJ, SEPTEMBER 15, 2009
http://online.wsj.com/article/SB125297162259710323.html

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