The Misunderstood Real Estate Market

  The available inventory of homes for sale is shrinking to alarming low levels when compared to the total amount of reported foreclosures.  The banks are clearly in position to manipulate property values yet again and the media is talking about it.  Where are the true journalists and why are they not talking about this?  Roughly 85% of all MLS listings are bank owned or short sell properties today.  If the banks regulate the amount of available properties for sale then they can artificially keep values up.

  This hardly seems fair in the big picture that the banks would regulate available properties for sale to raise selling values.  We all know that the banks are holding down refinance values with pending short sell or REO listings.  This is clearly a manipulation of values when we all know that the Bank owned properties sell for much more than the listed price.  I have seen people offer as much as 85,000 over the asking price and still not get an excepted purchase offer.

  I am sure that the Banks are yet again going to blame Brokers for the housing bubble and the average person is going to believe it because they do not understand how the system works.  The Banks are blaming Brokers to hide much like Obama blames Bush whenever his popularity starts to slip.  This is simple old fashion smoke and mirrors. 

  This lack of true real estate journalism is much like the sport beat writers that watch a professional athlete cheat on their spouse and says nothing.  Is it because the reporter is afraid that they will not be granted future interviews with athletes if report exposes the athlete?  Why is it we only hold people accountable if money is involved?  I am just saying that both the professional life and the personal life should be accounted for before we praise anyone.  I am sure Burney Madoff was a great guy to sit and discuss finance options with at one time.  Today the man is trashed, as he should be, because he took money from people.  Is there no moral values left today?         

  Just a few months ago the CEO’s of several of the large banks where in front of Congressional hearing while several Congressmen were grand standing.  The Media seems to not want to talk about it.  Some of the CEO’s stated that they did not want to sell the assets in question that they are sitting on because they believe that the assets are under value.  The assets in question are the foreclosed homes that the banks are holding.  So instead of forcing the banks to sell these properties to raise capital the Fed gives the banks billions at nearly no cost.

  So let’s put this in prospective, the Fed gives the banks billions to ride out their own bad business practices and the tax payers are picking up the cost.  Not only is the tax payer paying for the bailout cost in terms of additional taxes we are also paying in terms of extremely high credit card interest.  Also Fannie Mae has set the mortgage guidelines so high that it is difficult to obtain a home mortgage today. 

  Obama has been talking about his HARP mortgage program and forgets to tell us that the banks have no where to sell these HARP loans once they are done.  Banks today do not hold their own loans.  Banks today facilitate the loans and service the loans but they do not hold the paper.  The actual note holder is whom ever purchases the M.B.S. on the Mortgage Bond Market.  M.B.S. or Mortgage Backed Securities are sold on the Mortgage Bond Market and not the Stock Market.  The average person knows very little about how the process works so here is a graph on how the money is transferred from top to bottom. 

 Bond Flow Chart

  Everyone is to blame from the Fed’s to Joe homeowner for the Housing Bubble.  It is now time for reasonable guidelines to be set by Fannie Mae & Freddie Mac and time will correct this problem.  The Capitalistic system will fix itself in spite of whoever is President, Vice President or even a Congressman as long as the system is allowed to correct itself.    All of these quick fixes only prolong the inevitable and end up costingmore in the long run.


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