The entire real estate sector continues to be supported by:
1) Government stimulus (tax credits),
2) Government guarantees of Fannie and Freddie,
3) Federal support of both the long end of the curve (MBS purchases) and short end (easy monetary policy),
4) Relaxation of mark-to-market accounting rules (banks continue to hold loans at book value, despite being backed by underwater properties), and
5) Government mortgage modification programs.
Seriously….everything has been thrown into this sector, including the kitchen sink…yet it continues its slow death. The only solution to all this is jobs. Without job growth of more than 200K+ per month at minimum, there can be no recovery in the housing sector…..and no recovery in the broader economy, period.
