Jun 14, 2009 15
Has Obama Made the Housing Market Worse than Bush Did?
AUTHOR: Patty Cramer
Reading the title of this article will immediately infuriate many of you but let me play devils advocate. When Obama came into office, mortgage rates were trending lower and he did everything in his power to give every American citizen a chance to have access to those rates. For the first few months of his presidency, rates hovered around 4.9% and all was well in the housing market, right? With rates that low, surely there would be a sparked interest in real estate and home prices would bottom. Well, for the months of February and March, home prices did not bottom! In fact, 27 of 30 major markets were down month over month from February to March (this is the latest data we have).
To compound matters, mortgage rates were likely to head higher as the 10 year treasury rate started its uptrend at the beginning of 2009. Well, to put a ceiling on mortgage rates, Ben Bernanke announced that the Federal Reserve was going to buy back over $1 trillion in mortgage backed securities. Obama could have easily stepped in and stopped our printing press of a Fed chairman but he did not. As we fast forward to today, mortgage rates are now following the 10 year treasury rate and are trending higher QUICKLY.
To compound matters, many of the home owners who were trying to refinance at lower rates or modify their mortgage are now stuck. The rate they were quoted at just two weeks ago has increased almost a full percentage point. This has sent the mortgage market in a tailspin. Had Obama and Bernanke let free markets work, mortgage rates would have inched higher since March. Unfortunately, they tried to hold rates down which has caused them to shoot up almost a full percentage point in just two weeks.
This is horrible news for the housing market as prices are sure to fall even more. So, has Obama made the housing market worse than Bush did?