Brian on the National RE Post last week highlighted this story and made an incredible point. In the first quarter of this year Fannie and Freddie completed 58k foreclosure prevention actions for homeowners to keep these homeowners from potentially losing their homes to short sale or foreclosure. Sounds like a great idea, but is it?
For home prices to take a big drop so that home prices become affordable again we need millions of short sales and foreclosures to occur like they did from 2007-2011. Without millions of distressed sales home prices WILL NOT TAKE A BIG DROP.
I don’t remember Fannie, Freddie, FHA, or VA helping millions of people from losing their homes 15 years ago. Do you? Back then we let the capital market do its “thing”.
Today, the federal government is doing everything they can to keep people from losing their homes to foreclosure which sounds like a worthy goal. But, this is keeping home prices high and homes unaffordable. Thus, home prices will NOT DROP as the government is keeping this from happening.
Mike Simonsen, Altos Research’s President wrote in an article last week, “There are no signals anywhere in the data that home prices will fall this year. If you’re one of those who assumes affordability challenges means that home prices must fall, there is no sign anywhere that home prices are falling.”