Road to Housing Recovery Lengthening

A CNNMoney article by Joshua Steiner and Allison Kaptur warns prospective real estate investors that the rosy 2012 forecast for the housing market has two pronounced thorns. The first is less than five percent of the mortgage purchase volume is in the hands of private investors. Support for the housing market from the government is very near its limit. But without that support, private lenders will seek higher down payments and less credit risk, which will decrease demand and cause home prices to fall more. Falling prices will turn investors away, creating a downward spiral. Secondly, the Obama administration is not currently promoting new housing initiatives. Both leading Republican contenders, Newt Gingrich and Mitt Romney, say the housing market needs to hit bottom and clear on its own. The authors note the failed leverage of the National Association of Realtors (NAR), the National Association of Home Builders (NAHB), and the Mortgage Bankers Association (MBA) to get increased GSE loan limits extended suggests the government may have reached its housing industry support limit.

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