I look askance at Alan "Maestro" Greenspan's lament that a second housing collapse will spark an unfortunate recessionary relapse. Boo hoo. Home prices need to fall to clear the market of vacant inventory. The housing bubble's first collapse would have brought about that new equilibrium already were it not for the reinflationary drive of Greenspan's proteges at the Fed and Treasury. There's nothing unfortunate about forcing homeowners who deliberately overstretched to finally learn to live within their means. This is necessary even if it comes at the price of homeownership falling to its lowest level in almost two generations.
Aspiring home buyers will wince when the Fed rolls out its latest QE move to further prop the mortgage market. The Fed is holding onto those junk mortgage bonds because their imaginary value represents what little net worth many Baby Boomers have as they head into what would have been their golden years.
This mad pumping of a moribund housing market can't continue forever.
Full disclosure: Anthony J. Alfidi does not own a home but is long puts against IYR.
Aspiring home buyers will wince when the Fed rolls out its latest QE move to further prop the mortgage market. The Fed is holding onto those junk mortgage bonds because their imaginary value represents what little net worth many Baby Boomers have as they head into what would have been their golden years.
This mad pumping of a moribund housing market can't continue forever.
Full disclosure: Anthony J. Alfidi does not own a home but is long puts against IYR.
