Dr. Housing Bubble 02/06/11

[Crewleader]

Bank of America and their global banking profits – California negative equity will push many into foreclosure, examination of inflated California zip codes, banks more willing to push shadow inventory into the open.

Politicians like to talk about affordable housing but in reality favor policies that keep home prices inflated. The Federal Reserve has been the most active in suppressing adjustments in the market by keeping mortgage rates artificially low. Since the public is largely focused on the monthly payment, a lower mortgage rate allows home prices to remain higher than the market is willing to pay. If you think about the drop in sales and slow decline in prices in spite of all efforts, it boils down to the reality that good jobs are not being added and people cannot afford homes at current levels. This is clearly the case in California. Banks have started leaking out shadow inventory to the market but the inventory is so large that it will take years to clear out. Home prices at their core need to reflect the immediate local area income. Unlike a stock where being an owner can be global, buying real estate is largely a local matter. This is why California home prices are still inflated given the state’s unemployment and underemployment rate of 23 percent. Let us look at a few counties and see what portions of their homes with mortgages are underwater.

http://www.doctorhousingbubble.com/bank-of-america-global-banking-profits-california-negative-equity-push-owners-into-foreclosure-lower-prices/