The housing market in the US is making a temporary
recovery that has no longevity attached to it at all.
Housing bubbles seem to be popping up all over the United States in locations
popular to reside. Mortgage rates are still sitting at historically low
standards but continue to climb as the economy strengthens. The government is
currently stimulating the housing market in the United States through bond
buying to keep long term mortgage rates low. This is all great at the moment,
but what is going to happen when the government takes their hands off the
housing market? I would say any sensible human being sees that this housing
recovery that is taking place is not natural, it is merely the government using
stimulus tactics to revamp the market, it has no plan for what is going to happen
once they stop stimulating. Once the government take their hands off they think
that this industry will sustain itself through hopes and prayers.
Another sign that the housing market will not
sustain itself over time is the amount of people that have properties they
bought for a price much higher than they are worth now. People who bought
before the recession are now in a tough situation because they are paying off
massive mortgages on a property that isn't worth a fraction of the price. They can't
sell because they would not even come close to breaking even with the price
that they bought it for. Although the value of homes is increasing, it is
increasing so slowly that it would take many years before it turned back to the
way it was before the recession. At this point the government will have already
stopped their stimulus tactics and the market will be right back where is
started.
Historically low mortgage rates also says something
for the banks. If mortgage rates are so low then they will not be making nearly
as much money as they have in past. When the government stops bond buying from
the banks they will no longer be able to afford low mortgage rates the way they
are now. There will be an immediate spike in mortgage rates once the government
takes their hands off the situation. Banks will be put under a lot more
pressure to earn once the bond buying tactic is put to rest. This means that
they will also become a lot tighter on who they give loans out to. Banks are
not under as much pressure right now so their loan policies are a little looser
because they can afford to be.
Anyone who understands the housing market in the
United States knows that once Ben Bernanke announces that bond buying is
through, all mayhem is going to break loose. We will be headed right back to
where we started with the housing market. It just doesn't make logical sense to
think that once the stimulus tactics are lifted, that the housing market will
continue to thrive. There is no back bone or base to the recovery that
insinuates us to believe it will sustain. if the federal reserve could map out
a plan for what they will do to sustain the market after they get rid of bond
buying it may look a little more promising to all.
Patches, you have written an excellent counter argument to your current stance on the housing market. The grammar, composition and the message are all well done. In fact, you have convinced me that The Devil's Advocate is right. If the government does take the squeeze of interest rates, then all hell will break loose.
ReplyDeleteI agree with swampbilly your grammar and the way you organize your argument is very well done/effective and persuading. I like the way you look into the problems of the future housing market. I too think that this will become a huge problem down the road. I never thought about the troubles that banks will have yet to come. I look forward to hearing more about your opinion.
ReplyDeleteThe housing market in the US is making a temporary recovery that has no longevity attached to it at all.
ReplyDeleteYou can say that simpler Patches…
“The US housing market’s recovery is temporary.”
Let’s edit that entire first paragraph.
“Housing bubbles are reappearing everywhere people want to live. The government is stimulating the housing market through bond buying to keep long-term rates at historically low levels. But those same rates are climbing as the economy strengthens.
“What will happen when the government takes their hands off the housing market?”
Now that you’ve said those sentences above, do you need any of the following sentences?
I would say any sensible human being sees that this housing recovery that is taking place is not natural, it is merely the government using stimulus tactics to revamp the market, it has no plan for what is going to happen once they stop stimulating. Once the government take their hands off they think that this industry will sustain itself through hopes and prayers.
Nope. Those are all repeats.
You clearly understand the market, especially if this is you making a Devil’s Advocate argument for Armageddon when you really believe everything is going to be fine. But you can clean up your language Patches. You could create a second draft of this piece that cuts it in half—that says the same thing in half the words.
Then you could expand on it again.
The point of the DA is to get you thinking with your writing and expanding on it. Did exploring this point of view on the market change your mind at all?
But sometimes a second draft or third draft is not a transformation, it’s just a clean up job.
Good work.