Home Values, The American Dream & The Middle Class – A Realtor’s Perspective
The US Federal Government says that it’s doing everything that it can to help homeowners. However, not one homeowner I know is better off financially for making payments on a home that will take a lifetime, if ever, to own…..even at 1% interest rates.
The government, instead, has actually rewarded the banks with administrative fees for “successfully” completed loan modifications and given them the opportunity to keep “bad” assets off of their balance sheets. The above “license” has empowered banks to artificially increase home values by allowing them to control timeline/inventory that foreclosure homes (basic economic principle of supply vs. demand) are released into the market- making them in effect an illegitimate branch of government.
So, banks get to trickle their inventory to speculators and home shoppers who are paying a premium for over-valued real estate. The government calls this a slow-landing for the housing mess; I call it a fleecing of wealth from the middle class because that’s who’s buying. Similar to the consumer spending initiative it started seven years ago when it began lowering interest rates to today’s current 60 year record lows and permitting banks to sell negative amortization loan products with no oversight – effectively turning homes into ATM’s.
If this continues and repeats itself in future generations, the middle class will eventually become extinct. Just imagine how much more affordable housing would be if the banks had to auction off all their homes speedily. And, how that scenario would increase the number of America’s middle class.
What can we do to push back against this corrupt situation? First thing, is to boycott representing short-sale clients and steer clients away from the loan modification process and towards using the deed-in-lieu to speedily release the home back to the bank and begin the consumer credit “healing” process.
We should also demand that national and regional real estate advocacy groups as well as associations and franchises educate us on what is really going on here in America so that we can make educated decisions.