Minnesota Real Estate Investors Association, Inc.

Minnesota Real Estate Investors Association, Inc.

When Will We See the Housing Recovery?


For months I have been hearing all the experts predicting that we are finally seeing the bottom of the market, and every month they keep saying the same thing. I have even said the same thing, because in small areas, prices have stabilized or even increased slightly. But it seems like the majority of area’s are still falling, just not as fast as other areas.

So when will we see the recover. At this point, your guess is as good as mine. I am positive that if the president’s administration (that includes the current administration as well as the previous one) and congress would have just let the market correct itself, we would already be on our way to recovery and we would have seen prices bottom and very possible start to slightly increase before leveling off.

Now it looks like the current president and congress want to prolong the recovery for political gain. This infuriates me and it should you as well. The housing market is the basis of the American economy and the politicians are doing eveythoin they can to keep driving housing prices down.

You disagree with me, then let’s take a look at a few things congress have either passed or are working on passing as we speak.

  • TARP program: This program was sold to the American public as the only way to prevent the housing crisis and they were going to use the $700 Billion dollars to buy up bad loans. However, they never bought up bad loans, but they did buy stocks in the big financial institutions.
  • The President’s $1 Trillion Stimulus Bill: We were told that if we didn’t pass this bill yesterday, then unemployment would go as high as 9%. There for we needed the stimulus bill to stop unemployment below 8%. As of today, unemployment is almost at 10%. The stimulus bill was also supposed to create 2 million jobs which would help the housing market as more people would be working, there for they would be able to afford their house or allow them to buy a new one. Rather than creating or saving 2 million jobs, we have actually lost over 2 million jobs. That’s a 4 million job swing and the funny part is, they have spent less than 1% of the stimulus money so far. The majority of the stimulus money isn’t supposed to be spent until the year 2011-2012, which just happens to be election year for Obama.
  • H.R. 1728: Mortgage Reform and Anti-Predatory Lending Act: This bill will prevent investors from selling more than 1 property every three years with seller financing if it passes the senate. This will further decline real estate values because the option of selling on a contract for deed or taking back a small second so the buyer can get a first mortgage.
  • H.R. 2454: American Clean Energy and Security Act of 2009: otherwise known as Cap and Trade, AKA Cap and TAX. This bill, if it passes the senate will increase all energy cost for everyone. This includes gas and electric utilizes, not just gasoline.

Then there is the foreclosures. We have only seen a small fraction of the foreclosures that are yet to come. I think that we may have seen only about 25% of the total number of foreclosures that are expected because of the continuing job losses, tax increases and congressional spending.

These are just a few of the big ones. And all this stimulus combined will drive real estate values down even further. From an investors stand point, things couldn’t be better, because rents are currently holding were there are, so now is the time to cash flow. For the regular home buyer, this is the best time to buy, but for sellers, things don’t look to good in the near future.

I wish I had a crystal ball and could predict what will happen, hopefully I am wrong and real estate values will stabilize and start to increase like all the experts have been predicting for months.



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forexbtom@yahoo.comThat is very interesting topic man, I hope that the housing recovery is possible now (apr 2010), because, the world is getting recover from the economic crisis now. Hope so :)

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Robert Zuniga7/9/2009

robert@stpaulinvestmentdeals.comMike, It is true, some of the Federal Steps taken favor the status quo (big banks, large realty groups, large mortgage houses) and not the flexible investor, the entrepreneur or the qualified home buyers in the market. Let's hope reality sinks in with people about what is going on and they get involved and contact their representatives.

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