"Because the banks are holding many of these distressed assets and if the Fed lets the price fall the bank's balance sheet blows up" Bingo. If the mortgage holders have no choice but to flood the markets with many thousands of listings at 'sell at any price' or something like it, then the game is up. Game over. Hence, the float. Honestly, it's a very smart way for the government to manipulate the market - they are the only 'game in town'. The Fed is ensuring that there will be no 'run on the bank', be it financial or real estate.
Seriously? Because these aren't surplus lima beans they are several hundred thousand dollar houses that represent the lifetime investment of families. Normal people are less willing to recognize and accept that they have to take that kind of hit. Housing prices are far sticker than most assets. When the mind set changes the prices will change.
It transformed into another type of ponzi as soon as lending standards were flushed down the toilet and housing prices went parabolic. It very well might be the lifetime savings of some people, but for just about anyone who purchased their house more than 10 years ago they are certainly not underwater if they played it straight. Meanwhile the disconnect between the ponzi beneficiaries versus those who are at the bottom of the pyramid has never been greater. Some ranch house that might be on the market for $600,000 in an urban suburb that sold for $200,000 10-12 years ago, $150,000 15 years ago and maybe $90,000 25 years ago, etc, etc...Then throw in the property taxes, utilities, etc, etc... Even if a guy has a well paying job, it's going to take a much more significant bite out of the new guy's pocket than it ever did out of the original owner. At this point, we know none of this shit matters though. What does matter are local taxing bodies being able to get their cut out of this shitstorm. So they can pay off their leeches who can live a comfortable retirement off the private sector's hard work.
property taxes are brutal in Cook country which makes it harder for one to get approved for a loan as the taxes are such a large annual amount or monthly expense (if escrowed into your mortgage payment) proprty taxes will be going up, HOA fees in condos and lofts will be going up and property values will continue to slide. No thanks
That sums it up. But do you guys see how all of this, once again, plays handsomely into the public sector's lechery? There was a study (granted not that comprehensive, mostly anecdotal) that property taxes are, in fact, holding steady to moderately increasing on a national basis while assessed values decline. Simple fix: just adjust the formula for extracting more property taxes for the poor slob who is held hostage by the taxing authorities. I knew it would happen, it makes no difference whether we are in a recession, depression or a booming economy, the taxes always go up so that we can pay off the public sector which has grown by leaps and bounds over the past decade. So now we enter the second phase of recognition, where people finally pay attention to the fact that real estate is on its ass, the haircuts to make it a buy at prices that are within reason isnt there, and the property taxes go up, utility costs go up and the cost of ownership increases, while our economy sucks wind. I'm sure the Fed's decision to bail out all these corporate insiders holding shares that they can unload was an engineered decision to try and save the upper tier of the housing market as well. Lots of paper shuffling and perpetual asset inflationary schemes, etc, etc...