Writing in the albirminghamnews, Professor Scott Bealuier of Troy University says to speak of a housing market recovery is premature. He says the recovery so far is minor when compared to what the housing market was pre 2006. It’s now a government-driven recovery supported by the Fed’s monthly purchase of $40 billion in bonds (QE3), making it difficult to separate the fundamental growth from government growth. He calls QE3 a mortgage refinancing stimulus package: as in, those currently in homes are the main beneficiaries. Saying the government’s interference is prolonging a real recovery, Beaulier says home prices should have been allowed to fall, perhaps another 15-20 percent. He says it will take years to clear out the five million homes now delinquent or in foreclosure; what will happen when the Fed starts selling all those bonds. Noting how the weak economy is keeping would-be home buyers in their parents’ homes, he says, “Rather than lay the foundations for a solid recovery by letting prices fall, however, the government has tried to prop up housing through bailouts and incentives like the first-time home buyer credit from 2008 to 2010. These programs turned what should have been a rapid correction into one that has taken five years, and there’s still no real end in sight when it comes to our stagnant housing market.” As MHProNews understands, the housing ‘recovery room’ is very different from a housing ‘recovery’—it’s bandages and grogginess.
