I neglected to comment on this last week:
Lenders are poised to take back more homes this year than any other since the U.S. housing meltdown began in 2006. About 5 million borrowers are at least two months behind on their mortgages and industry experts say more people will miss payments because of job losses and also loans that exceed the value of the homes they are living in.
“2011 is going to be the peak,” said Rick Sharga, a senior vice president at foreclosure tracker RealtyTrac Inc. The firm predicts 1.2 million homes will be repossessed this year.
Quick review. The recovery of the housing sector was the underlying justification for nearly every government emergency action between August 2007 (when the Panic began) and today. Yet foreclosures are at extraordinarily high levels, prices have not “recovered” vacancies are high and “experts” think the worst is still ahead of us.
If this is success, then what would the geniuses in DC claim as failures? Now, I don’t care much for the recovery of the housing sector. My instincts tell me that prices still need to fall, and that there is something still terribly amiss in that sector. But let’s remember what has been done to “save” the housing sector and to prevent its slump from crushing our financial system:
The housing sector remains an albatross. Unemployment sits at 9.4%, the longest stretch over 9% since 1981-82 (and expected to beat that by the end of this year). Financial “reform” leaves Fannie and Freddie in place. FDIC resolutions are on the rise. And the 2011 NFL season is going to be cancelled.
How’s this for a novel idea: let prices fall. Don’t give me that “double-edged sword thing either.” Aren’t the banks far better capitalized today than 3.5 years ago?
How’s this for a novel idea: eliminate Fannie and Freddie.
How’s this for a novel idea: maybe more people ought to be renting housing, especially if we seem to be suffering from such serious structural unemployment.
I’d love to see an estimate of just how much the failure of allowing the housing market to correct itself has really cost us. We can never know of course, but it would be a fun thought experiment. I’m too frightened to try it.