Our friends over at CNN Money are reporting that this summer may be the one where home seekers find a clearance sale. And, I agree. Sales volume is up in May. But, home prices are going down in a blaze of glory at a pace not seen since the beginning of the “bubble burst”. For Southern California, in North Orange County, it can be speculated that we may see 10% to 15% reductions in median home values. To read more about it, click here http://money.cnn.com/2011/06/01/real_estate/summer_clearance_sale/index.htm.
As I have stated before in this real estate blog, the pressure is on the Federal Reserve to increase the interest rate because the US dollar’s value is under international and domestic scrutiny and the bond market is loosing steam. As a matter of fact, the availability of “cheap” money and irresponsible loan products (brought to us by our Federal Government for almost an entire decade) is, in my opinion, the chief reason that we Americans have lost the bulk of our personal wealth. One can speculate that the above circumstance is, in fact, an intentional fleecing and re-distribution of wealth — taken from the middle class and handed-over to the rich. Financial institutions were allowed to sell fake products like securities-baked hedge funds that they sold to the American public and the entire world. And, banks were given TARP funds to provide loan modifications to homeowners that in the end proved to be nothing but a rent roll for the banks since 90% of the modifcations ended in foreclosure anyway.
In my opinion, the only effective way to recover from our economic mess is to allow the FREE market to correct itself rather than propping it up like a show pony and yoking it. If our government would do the right thing and raise interest rates and allow banks to sell the properties in their portfolios, then we would actually get to see the bottom of the real estate bubble and we would be well on our way to a true and speedy recovery instead of the dragged out one that is in place now.