hello. is there anyone that is following the political activities involved in the potential bailout of the housing market? even if they bailout subprime mortgages, they still can't prop up the entire housing market, and prices of homes must still go down. if prices of homes still continued to go up... when would it end? $1M for the average 2,000 sqft 4 bedroom residential? then there are many other debts to unwind, like credit cards and student loans. meanwhile governments have their share to unwind, like healthcare. what must end up happening is that people will reduce consumption by being more efficient and sharing resources. maybe we will see more family members living in the same home or sharing cars, like in other cultures.
Its irrational to think or expect a bailout of subprime or alt-A loans. The lenders themselves will renegotiate the loans as needed to avoid foreclosure as much as they can because foreclosing is bad for their profits. That's already started to happen. Renegotiating costs a few thousand vs foreclosing costs an average of $80,000 I heard on TV today.
You are right about the renegotiations... According to NY post, Freddie Mac apparently bought out $20 billion of "risky mortgages", so I am guessing that these types of mortgages will be readjusted to something affordable. Also, WaMu (the bank) will refinance $2 billion.
bailout will only slow the inevitable bust to come........... since real wages are flat, living standards are being financed with debt which is subsidized by China and Japan....... they say that they're our friends for now
If the government decides to bail the housing market out that would bring a lot of sellers back to reality and they would realize they can't sell for their current prices(because they 'dont want to give it away'). Its like the whole world would be saying 'look guys housing if fked', panic might take over and prices would start to drop
=============== Divi; Yes,I am; not likely subprime gets bailed out, but possible. And housing is a local market, to tell truth; some south and western markets may very well keep uptrending, many never had double didget growth.