Dick Bove: Housing Market Will Fall 10%-15% When Fed Stops Subsidizing Home Prices

[Raybyrnes]

Very Similar to what occurred in the Auto Industry when cash for clunkers expired. Once the government moves to the sidelines we could see a fairly big decline.

http://www.gurufocus.com/news.php?id=88085

[jpinpb]

But will the government really step to the side or is some other scheme up their sleeves. As much as I agree w/what Bove is saying and Meredith Whitney, the wild card the government holds will influence what will happen. Fanny and Freddie are picking up the slack. Maybe the Fed can really pull back. March 31st is the end date, but we’re looking at June for what’s in the system already to work its way through. He qualifies his 15 to 20% by saying he doubts we’ll ever get a free market. Unfortunately, the government has invested so much into this already. If they abandon ship now, all the cargo of money is going down w/it.

[jpinpb]

But will the government really step to the side or is some other scheme up their sleeves. As much as I agree w/what Bove is saying and Meredith Whitney, the wild card the government holds will influence what will happen. Fanny and Freddie are picking up the slack. Maybe the Fed can really pull back. March 31st is the end date, but we’re looking at June for what’s in the system already to work its way through. He qualifies his 15 to 20% by saying he doubts we’ll ever get a free market. Unfortunately, the government has invested so much into this already. If they abandon ship now, all the cargo of money is going down w/it.

[jpinpb]

But will the government really step to the side or is some other scheme up their sleeves. As much as I agree w/what Bove is saying and Meredith Whitney, the wild card the government holds will influence what will happen. Fanny and Freddie are picking up the slack. Maybe the Fed can really pull back. March 31st is the end date, but we’re looking at June for what’s in the system already to work its way through. He qualifies his 15 to 20% by saying he doubts we’ll ever get a free market. Unfortunately, the government has invested so much into this already. If they abandon ship now, all the cargo of money is going down w/it.

[jpinpb]

But will the government really step to the side or is some other scheme up their sleeves. As much as I agree w/what Bove is saying and Meredith Whitney, the wild card the government holds will influence what will happen. Fanny and Freddie are picking up the slack. Maybe the Fed can really pull back. March 31st is the end date, but we’re looking at June for what’s in the system already to work its way through. He qualifies his 15 to 20% by saying he doubts we’ll ever get a free market. Unfortunately, the government has invested so much into this already. If they abandon ship now, all the cargo of money is going down w/it.

[jpinpb]

But will the government really step to the side or is some other scheme up their sleeves. As much as I agree w/what Bove is saying and Meredith Whitney, the wild card the government holds will influence what will happen. Fanny and Freddie are picking up the slack. Maybe the Fed can really pull back. March 31st is the end date, but we’re looking at June for what’s in the system already to work its way through. He qualifies his 15 to 20% by saying he doubts we’ll ever get a free market. Unfortunately, the government has invested so much into this already. If they abandon ship now, all the cargo of money is going down w/it.

[pencilneck]

If history is any guide (especially recent history), government intervention occurs after the crisis rather than before.

A lot of the government support is scheduled to end over the short term (1-2 years). I think they will wait until the housing market starts dropping again, Then they will be totally free to enacting another emergency measure that modestly helps to re-stabilize the housing market while, coincidentally, making a few well connected people and corporations very wealthy in the process.

Its just a lot easier to do this during a crises rather than beforehand.

[pencilneck]

If history is any guide (especially recent history), government intervention occurs after the crisis rather than before.

A lot of the government support is scheduled to end over the short term (1-2 years). I think they will wait until the housing market starts dropping again, Then they will be totally free to enacting another emergency measure that modestly helps to re-stabilize the housing market while, coincidentally, making a few well connected people and corporations very wealthy in the process.

Its just a lot easier to do this during a crises rather than beforehand.

[pencilneck]

If history is any guide (especially recent history), government intervention occurs after the crisis rather than before.

A lot of the government support is scheduled to end over the short term (1-2 years). I think they will wait until the housing market starts dropping again, Then they will be totally free to enacting another emergency measure that modestly helps to re-stabilize the housing market while, coincidentally, making a few well connected people and corporations very wealthy in the process.

Its just a lot easier to do this during a crises rather than beforehand.

[pencilneck]

If history is any guide (especially recent history), government intervention occurs after the crisis rather than before.

A lot of the government support is scheduled to end over the short term (1-2 years). I think they will wait until the housing market starts dropping again, Then they will be totally free to enacting another emergency measure that modestly helps to re-stabilize the housing market while, coincidentally, making a few well connected people and corporations very wealthy in the process.

Its just a lot easier to do this during a crises rather than beforehand.

[pencilneck]

If history is any guide (especially recent history), government intervention occurs after the crisis rather than before.

A lot of the government support is scheduled to end over the short term (1-2 years). I think they will wait until the housing market starts dropping again, Then they will be totally free to enacting another emergency measure that modestly helps to re-stabilize the housing market while, coincidentally, making a few well connected people and corporations very wealthy in the process.

Its just a lot easier to do this during a crises rather than beforehand.

[davelj]

I agree with Bove that there’s a high likelihood that prices will revisit the prior trough – which is about 10%-15% below where we are now. With slightly higher interest rates, reduced incentives and more foreclosures hitting the market, that seems logical.

But… I agree with other posters that – in so many words – the Officialdom has drawn a valuation line in the sand somewhere around the long-term trend valuations (which, again, are about where the trough was reached last year). So, we may fall off a bit from here, but if prices fall 10% or so, expect to see new incentives, etc. in an effort to spur demand to suck up all of the foreclosures.

That’s the will of the majority. Learn to love it.

[davelj]

I agree with Bove that there’s a high likelihood that prices will revisit the prior trough – which is about 10%-15% below where we are now. With slightly higher interest rates, reduced incentives and more foreclosures hitting the market, that seems logical.

But… I agree with other posters that – in so many words – the Officialdom has drawn a valuation line in the sand somewhere around the long-term trend valuations (which, again, are about where the trough was reached last year). So, we may fall off a bit from here, but if prices fall 10% or so, expect to see new incentives, etc. in an effort to spur demand to suck up all of the foreclosures.

That’s the will of the majority. Learn to love it.

[davelj]

I agree with Bove that there’s a high likelihood that prices will revisit the prior trough – which is about 10%-15% below where we are now. With slightly higher interest rates, reduced incentives and more foreclosures hitting the market, that seems logical.

But… I agree with other posters that – in so many words – the Officialdom has drawn a valuation line in the sand somewhere around the long-term trend valuations (which, again, are about where the trough was reached last year). So, we may fall off a bit from here, but if prices fall 10% or so, expect to see new incentives, etc. in an effort to spur demand to suck up all of the foreclosures.

That’s the will of the majority. Learn to love it.

[davelj]

I agree with Bove that there’s a high likelihood that prices will revisit the prior trough – which is about 10%-15% below where we are now. With slightly higher interest rates, reduced incentives and more foreclosures hitting the market, that seems logical.

But… I agree with other posters that – in so many words – the Officialdom has drawn a valuation line in the sand somewhere around the long-term trend valuations (which, again, are about where the trough was reached last year). So, we may fall off a bit from here, but if prices fall 10% or so, expect to see new incentives, etc. in an effort to spur demand to suck up all of the foreclosures.

That’s the will of the majority. Learn to love it.

[Author]

Posts