FED with no plans on purchasing MBS??? Hmmm....
(media.greatawakening.win)
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Housing market's gonna enter a new phase of collapse as Fed no longer buying up mortgages, although they now own roughly 50% of all US mortgages to date.
Lenders will be less eager to offer mortgages to all but the highest credit rated seekers if they can't dump the multitude of their garbage loans onto the Fed.
Kinda, but not really. Wall Street was buying NINJA (No Income No Job Applicants) loans from shady mortgage brokers and selling bundles of them as packaged garbage tranches to gullible buyers (aka state/school/university pension funds) that should have been junk-rated but were given AAA by the rating agencies. It was all a gigantic sham from origination to dumping as the movie showed.
But the Fed has been buying up any and all mortgages for over a decade now, as Fannie Mae & Freddie Mac used to do. Loan originators could dump their bad loans onto the Fed's balance sheet without a worry. But if the Fed stops buying them up, then there's nowhere to run if the loans go bad. Thus, loan originators are going to become much more selective on offering loans without the Fed bailout option in play.
All this adds up to fewer qualified buyers which means sellers have to lower prices ---> which leads to lower property values ---> which leads to shrinking home equity loans ----> which leads to homeowner's "wealth" dropping precipitously --->> which leads to fewer impulse buys, vacations, eating out, etc. --> which leads to business failures ---> which leads to job losses....etc.
You get the gist. It's a vicious cycle. The fictitious realm of "appreciating real estate" will finally come home to roost as the fraudulent offset to inflation it appeared to be and falsely convinced homeowners that they were growing wealthier while the banksters eroded away the value of the fiat currency.
I predict early 1960's prices for homes within the next 5 years. That'd be $25-$50K (a year's salary for a salaried professional in those days) for a typical 3 bed, 2 bath 2000ish square footer. Those were the final days when gold held the fiat dollar in check.
Net-Net - The Fed has been the ever-reliable "backstop" for continued garbage loans. If they pull out, the housing market will precipitously decline.
Yeah, that prediction is contingent on their demise. There's no way our current fiat system lasts 5 more years. It will be something entirely different and my prediction is prices of standard homes will be closer to a one year salary for an experienced professional, as it was for the hundred years prior to dropping the gold standard.
Technically speaking, homes should be depreciating assets just like cars. The older they are the more repairs and maintenance they need. This used to be the case before they suckered us into believing in monopoly money.