Wednesday, September 23, 2009
Avoiding A Housing Relapse
Bloomberg is warning that the recovering housing market may be heading for a relapse as President Obama and Federal Reserve Chairman Ben Bernanke consider ending support for the industry that is widely viewed as he source of the global financial crisis.
The Obama administration is studying whether to let a first-time home buyers’ tax credit expire as scheduled at the end of November. The $8,000 credit has had a major impact on the demand for hew and existing homes in most markets nationwide, with new-house sales rising 9.6 percent in July from the prior month, the most since 2005.
Ending these efforts may stifle the housing rebound by depressing sales and pushing up both mortgage-backed bond yields and interest rates on home loans, even in the face of the record-low zero to 0.25 percent short-term rates the Fed has engineered, said economist Thomas Lawler.