HAS THE HOUSING HURRICANE PASSED?
INDUSTRY NEWS, REAL ESTATE LEGISLATION
September 23rd, 2008
Unless you live in a cave, you are probably aware last week was a terrible week for the US financial markets. The government had just taken over Freddie Mac and Fannie Mae, then bailed out AIG, B of A bought out Merrill Lynch and Lehman brothers declared bankruptcy. The stock market saw a big sell off, solid companies saw their stock tank and other stock exchanges reacted negatively the world over.
My immediate worries centered around real estate transactions on the verge of closing. Will banks fund the loans, will cash buyers get nervous, will I jump out a high window? Could our financial markets weather this hurricane? Was this the eyewall or the outer bands of a huge storm? Will their be a pause before another wave of fury?
It is difficult to assimilate all the news and information spilling out of the media and make sense of what
tomorrow holds. On one side, we have our elected representatives telling us these bailouts are necessary because the alternative could be another Great Depression. How could that be, we are not officially in a reccession, right? There are others, like myself, that don’t believe taxpayers should come to the aid of unwise and even unsavory investors that used no common sense loaning or borrowing money. What message does that send to hard working people that make sacrifices to live within their means while others get drunk with money only to have the government bail them out of their hangover, then give them a hair of the dog in the form of obscene severance packages?
Now the government is willing to take poorly performing mortgage-backed securities off the books of these financial institutions in trouble. What about the other banks and stock brokerages that minded their p’s and q’s, what do they get? This seems to spread the government’s manner of doing business to private companies. If you are like me, you wonder how the government can spend more than they take in. Now it seems the government will step in, like the knight in shining armor, if you totally make a mess of things, and save the day.
The details of these maneuvers are sparse, probably still being hammered out. It doesn’t do much good to say I told you so. Let’s hope the life preserver thrown to the US economy is buoyant enough to keep us afloat. Otherwise, it will be tough times ahead for all but the very wealthy.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
