Reports Wednesday that it may take "years" before we see a housing market recovery may be tame in their forecast.
As Crime, Politics and Policy has predicted before (October 6, 2010), the housing market could be hit by several factors including a sharp uptick in mortgage rates. (The bond market may already have responded; some inverse-bond-price ETFs such as the one with New York Stock Exchange ticker "TBT" are already up 30% recently from their lows.) This would reduce new purchasers' buying power as banks re-assess their ability to make monthly payments and lower the principal amount of the mortgage they qualify for. That should alone account for a sizable drop -- at the minimum, it should stop any increases in price in their tracks.
However, all these people with adjustable rate loans (whether first or second mortgage) will start to get hit as those loans get ratcheted higher. This will trigger a new wave of eventual foreclosures, because there will be some banks that will seek to seize houses that still have equity.
Ask yourself if any slow recovery will be enough to overcome the foregoing factors.
Eric Dixon is a New York lawyer and strategic analyst who provides legal, business and strategic advice to clients through his firm, Eric Dixon LLC. Mr. Dixon has been a lawyer since graduating in 1994 from Yale Law School. Mr. Dixon is available for comment at 917-696-2442 and viai email at edixon@NYBusinessCounsel.com.
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Thursday, December 9, 2010
Housing Double-Dip Coming?
Lawyer, strategist, advisor and confidant to opinion leaders, business leaders on personal, professional and political matters. Confrontational investigative lawyer and blogger. Yale Law School graduate (1994). Serves on Board of Directors of independent economic policy think tank Financial Policy Council. Master screenwriter, speechwriter and writer. Contact me at edixon@NYBusinessCounsel.com or 917-696-2442.