Foreclosures Rise Again As Banks Play Musical Chairs
|February 18, 2014||Posted by Staff under Financial|
This 2014 excerpt of CounterPunch, Feb 15, is by Mike Whitney. It also appeared in OpEdNews.
Economic fundamentals played no part in the so called housing rebound. The economy stinks as bad today as it did four years ago when the government number-crunchers announced the end of the recession. The reason prices have been rising is because of the Fed’s fake rates and QE, inventory suppression, bogus gov mortgage modification programs, and speculation by Private Equity and investors groups.
The big PE firms made a killing, since prices soared 12 percent in one year. In some of the hotter markets, investors represented upwards of 50 percent of all purchases.
Sales are down, purchase applications are down, and the country’s homeownership rate has slipped to levels not seen since 1995, 18 years ago.
The Fed’s $1 trillion purchase of mortgage backed securities (MBS) and zero rates have done nothing to stimulate “organic” consumer demand. No “trickle down” at all. All the policy has done is generate a temporary surge of speculation that’s distorted prices.
Household growth of 448,800 in 2013 represents a 48 percent drop in household growth relative to that from 2012 and marked the lowest annual household growth measure since 2008, in the depths of the Great Recession.
Nearly half of college grads have been scrubbed from the list of potential buyers due to their burgeoning student loans which now exceed $1 trillion. These kids will probably never own a home, let-alone have a positive impact on sales in 2014.
The number of “seriously delinquent borrowers” has actually gone up in the last year. Not only that, but many of these people haven’t made a payment in more than four years.
The banks have been dragging their feet for 40 months now, slowing down the foreclosure process (that adds to the shadow supply of distressed homes) in order to push up prices hoping to ignite another boom. Now — after three and a half years of blatant collusion — they’ve done a 180 and started speeding up foreclosures. Why?
They think that “institutional investors” are going to call-it-quits and move on to greener pastures. That’s going to push down prices, which means they’re going to lose money. So they want to get ahead of the curve and dump more houses on the market before the stampede. That way, they lose less money.
Ed. Notes: Foreclosures are sad for families but part of banking as is but maybe shouldn’t be. Maybe banking should change. But change how?
First, trends in economies are not smooth, rising or falling evenly; it’s more like two steps forward, one back, or vice versa. What the writer above is noticing is a temporary correction that won’t last more than a few months. It fits right into the more regular 18 year cycle business cycle, or more precisely, the land-price cycle. That cycle could be flattened so there’d be no more recessions and foreclosures. How?
Remove the value of land from the price of housing. How? Get government to recover the socially-generated value of land. How? Tax locations. Institute land dues. Raise the deed fee. However. Just do it.
Then housing — minus any price for land — would no longer attract speculators, no more inflating its price. Land and housing would only reflect “organic” demand, to use the jargon above.
And BTW, while recovering the value of locations and resources, don’t tax anyone’s labor or capital. Those taxes are not fair and merely counterproductive. Sans such taxes, the value of land will be high in a healthy way, able to fund a dividend to everyone, the key feature of geonomics.