Quote Originally Posted by BiscayneSunrise View Post
Given the very strong likelihood of less federal subsidies for housing, prices will drift further down.
As much as I would like to believe that the government and the Federal Reserve will give up on trying to reflate housing prices, this seems like wishful thinking to me. You have the following forces all desperately trying to reflate the housing bubble:

  • The Federal Reserve, which is keeping rates low to lower mortgage rates (which tend to inflate housing prices)
  • Christine Lagarde of the IMF is talking about the U.S. need to arrest housing price declines
  • The Obama administration is talking about doing something to allow people to refinance at the current low rates. Evidently, these people cannot currently refinance either due to being underwater on their mortgages or being lousy credit risks. If these refis occur, it is in all likelihood that the mortgages will be guaranteed by the government.
  • The NAR and other private interests will continue lobbying Congress to throw more good money after bad in the housing market.
  • The FHA continues to make very large loans ($600,000+) when it is supposed to be a lending program for financially disadvantaged people.

Housing prices will decline, I'm relatively certain. However, it's just going to take longer for things to hit bottom with all the false demand being generated.