Sales of previously owned U.S. homes unexpectedly dropped 7.2 percent in January to a seven-month low, indicating a lack of job growth is undermining government incentives to bolster the housing market.
Lack of sales will surely force existing sellers to drop their asking prices, further sinking home values in your neighborhood. This will put more homeowners underwater on their mortgages and force more foreclosures. The vicious cycle will soon pick up speed, and yet another sign is the Fannie monster's continuing hunger for bailouts:
Fannie Mae, the mortgage-finance company under federal conservatorship, said it will seek $15.3 billion in aid from the U.S. Treasury after posting a 10th straight quarterly loss.
The U.S. economy is not in recovery because mortgage-related debt has not been flushed into default. We've probably just crossed through the eye of the hurricane and are about to be hit by the next wave of the storm. The trouble with this hurricane is that poor public policy will prolong its duration. Batten down your hatches.