There is plenty of money floating around ONLY because of govt programs. FNMA FHA etc. Did you see the recent multi billion dollar quarterly loss reported by FNMA ? How long will this be allowed to go on ??
Inflated housing is a ponzi scheme that will come to an UGLY end if the govt intervention stops.
Barney Frank, Up-Chuck Schumer, Carolyn Baloney, Christopher Dodd, Maxine Muddy-Waters all have blood on their hands in the housing bubble yet nobody confronts them.
As far as turning people away, they just don’t qualify, the rate doesn’t matter.
When subprime was around, if someone didn’t qualify for a 6% loan, there was an 8%+ available.
Today if you don’t qualify, there really is no alternative, other than hard money.
FHA wasn’t needed a few years ago when 100% financing was available via subprime OR 80/20 loans. It is the new subprime. It allows people to buy houses with a low down. It artificially supports the market for now.
I think that it is fair to say that the vast majority of people who want a house already have one OR they cannot qualify to buy one.
Because a few people are chasing houses at the moment doesn’t create a hot market like 2002-2005. The market is not as hot as it was during the boom when you realize that the availability of financing is 180 degrees different than it was during the bubble. The current demand is thin.
It only takes 2 fools bidding against each other to run prices up.
This is simply the greater fool theory at work.
VERY few ppl are buying second homes today.
The real question is whether the pool of qualified buyers disappears before the supply of available homes does. The govt cannot control the price of homes. They CAN control the availability of financing, tax credits and incentives which only artificially manipulates the market.
For every qualified buyer who buys a house today, that is one less in the pool. I think that pool is shrinking faster than most people realize.
