I was just reading the latest housing market commentary on the National Association of Realtors website. I had to chuckle a bit as the NAR commentary tries to paint the best picture of the housing market possible. I guess my perspective, knowing the financing/debt markets better than most average people, allows me to see through much of the rhetoric that economists, REALTORS and other “experts” spew on a daily basis.  I think it is pretty easy to understand that a four-one-hundreths of a percent increase in home sales month over month is marginal at best…and that surely one cannot deduce anything about the housing market using only this one statistic.

Of course, as I drove to the office this morning, the news on the radio was all roses with regards to the housing market. “We have turned the corner” one expert said. I think I laughed out loud and I hope others listening did as well. What scares me most is that the overwhelming majority of people in this country have no clue what is going on in the debt markets. They have no idea how fragile some of the largest financial institutional players are right now. Leveraged to the hilt, it is not going to take much of a hiccup for more of the big boys to take the same path as Bear Stearns. Of course, you will hear shock and awe from the interviews of everyday employees and passers by when listening to the radio and reading the paper.  I was never one to be a media basher in the past, but the more I learn and the less I watch the nightly and local news, the more I realize that the media is making a mountain out of a mole hill 99% of the time.

I guess that is enough ranting for one morning. Have a good one.

tags: media, nar, national association of realtors, housing market, real estate

The Fed will be making an announcement tomorrow and the media as well as everyone else who doesn’t know what they are talking about, are hoping that they will announce a rate cut of some sort. While this will bring increased liquidity into the financial markets, it doesn’t mean the housing market will improve or be saved…or that Jane and John Doe who are losing their house will have a solution to help them. The issue today is that lenders have stopped making high leverage loans (loans with Loan to Value ratios above 80% as an example) to just about everyone. The people that need these loans the most, are the people that 1) have something like this in place and can’t afford it and probably never could and 2) are the ones losing their houses. A FFR cut is not going to help these people as it will have NO effect on lender’s lending policies and standards. As Lonnie said this morning in his email:

Everyone is waiting for the Fed announcement tomorrow and is hoping a Fed rate cut will rescue the housing and mortgage markets. As I stated once before, a rate cut may create liquidity in the financial markets, however, investors still need to believe mortgage lenders are making quality loans.

People need to understand that increased liquidity at this point merely helps people who have credit and the ability to support it, to borrow at cheaper rates. Lending guidelines are still extremely tight and that is not likely to change until the fat is trimmed from the housing market.

tags: bernanke, bubble, fed, fomc, foreclosure, housing market, interest rates