Oh my God, housing prices have fully recovered in two cities, and are up over 12% across the nation according to the twenty city Case Shiller study. Too bad that was in May before interest rates increased reducing affordability 17%. Then again, when can we ever expect real economic journalism from Obama sycophants?
Where to begin on all the news that wasn’t reported? GDP reports? Bernanke’s mush mouthed FOMC comments? Mortgage applications? Pending sales? HUD’s new social engineering? Jobs?
The economy is based upon the Bernanke printing press and not organic spontaneous growth that would support a real housing recovery. In order to keep up the facade of a recovery the government decided to change their GDP methodology and shazam $550 billion in added growth was discovered in Q2! Rising to the dizzying heights of 1.7%!
Of course Q1 was revised down to 1.1% growth. Did you read or hear that 3% growth is necessary to meet the job demands of population growth and to create opportunity for the currently unemployed? Of course not, you hear about the exciting news that the 1.7% Q2 growth exceeded economists expectations!
This provides Obama with another historical accomplishment for modern presidents following a recession; his tax and spend policies have resulted in the longest stretch of sub 3% GDP growth since Hoover!
With this stellar record Obama now proposes a Grand Bargain that is simply more of the same when the layers of the onion are peeled back. Higher net tax revenue from corporations, primarily small businesses, and increased spending to finally, and we really mean it this time, infrastructure improvements that will presumably help the middle class.
According to Distinguished Professor Emeritus Richard Judd of The University of Illinois Springfield (economics) we need 360,000 jobs for 30 straight months just to recover the jobs lost since 2008.
Professor Judd shares that since Recovery Summer of 2010 there have been an average of 114,000 jobs a month created. The problem is monthly nearly 90,000 of those jobs in 2010 were full time but for the past year only 21,000 were full time. Seems we are becoming a nation of part time workers due to Obamacare.
According to Michael Snyder ‘The Economic Collapse Blog’: In fact, just six years ago there were about six million more full-time jobs in our economy than there are right now. Those jobs are being replaced by part-time jobs and temp jobs. The number one employer in America today is Wal-Mart and the number two employer in America today is a temp agency (Kelly Services).
Please tell me how this produces demand for housing besides rental?
An amazing thing happened in June following the rise in interest rates and the decline in affordability, pending home sales declined. Even more interesting : For the 11th week of the last 12, mortgage applications fell for the fastest three-month collapse since June 2009. Mortgage activity is now its lowest in two years with refinancing activity down 57% from its recent peak and new purchases have dropped to their lows of the year (down 13% from the highs) and stand exactly at three-year average levels. (ZeroHedge).
But have no fear Bernanke is here! These are the highlights of his recent comments: ‘inflation persistently below the 2% goal could present risk‘. Please explain to me if your goal is to keep printing money to help the economy but if inflation exceeds 2% you’ll have to slow easing but now inflation not reaching 2% poses a risk? Got it? Bernanke is boxed in and there’s no good way out.
After sharing the obvious, ‘mortgage rates have risen somewhat‘, Bernanke unleashed this brain teaser: ‘The Fed is prepared to increase or reduce the pace of purchases’. Now that we have that concise course of action by the Fed businesses and families can plan ahead?
But have no fear the social engineers are here! Shaun Donovan Obama’s newly appointed head of HUD has a plan to expand the middle class. In a 21st Century Fair Housing rule Donovan proposes that government needs to subsidize low income families living in poor neighborhoods with poor economic conditions so they can move to middle class neighborhoods where there are middle class economic conditions. Viola, these people become middle class!
The more government attempts to fix a system it has broken the more broken it becomes. Homeownership has fallen to 18 year lows while rents have hit record highs.
Housing bubbles are being created by the social engineers seeing that people who can’t afford homes buy homes, and the Federal Reserve’s interest rate policy pushing up prices. It’s deja vu all over again.
The opinions expressed here are solely those of Fritz Pfister or identified sources, and not necessarily those of RE/MAX Professionals of Springfield or RE/MAX International.