On the Housing Mess

In early June, we put our house up for sale – not with hopes of downsizing or upsizing, but resizing. In other words, we decided to seek a house with a similar square footage, but in a different configuration and allotment.

We have been in our current location for 23+ years, so we’re ready for a change, but we understood the current market’s difficulty. Almost three months later, we’re still here and do not see a buyer on the horizon. The bottom line is simple: housing inventory is too high and the number of buyers is much lower – not a good match. I really believe there are three factors at the center of the current housing market.

Jobs
Unemployment is high, and many with a job realize the cloud of uncertainty. These factors sharply decrease the number of potential buyers, which banks automatically reduced by setting qualifications for getting a loan.

Banks
Follow the dominoes:

• Many (but not all) financial institutions accepted borrowers with questionable qualifications, thus increasing the number of buyers.
• More buyers meant more sales of existing homes and newly constructed homes – thus creating an artificial housing boom.
• The housing market busts, thus foreclosures increasing, number of vacant houses increase, number of new home sales decrease, number of qualified buyers decrease, and the overall inventory of homes on the market drastically increases.

Politics
Contrary to many political pundits, no one White House administration is responsible because deregulation of the financial sector has happened over the past 30 years. Glass-Steagall Act, the Banking Act of 1933, established controls on the financial industry. Whether being the majority in a portion of Capitol Hill or being a Pennsylvania Avenue resident, I remain confident at pointing the fingers to both parties at various times.

The bottom line is simple. Glass-Steagall provided stability in the financial sector for 50 years, but since the players wanted more, including our elected officials, responsible homeowners are unable to more on because of the market conditions created by deregulation and irresponsible loan practices.

Today, Congressional Republicans are against the regulations passed by Congressional Democrats for the primary reason of disagreement. Let us remember that since neither party sought to reinstate Glass-Steagall, the answer of the reasons behind their actions are found in the following:

• The party’s best interest
• Elected official’s self interest
• Re-election campaign’s interest
• The party’s financier’s interest

In other words, having a stable financial sector in the best interest of the country and its citizens is too low on the priority list. Just follow the money.