The U.S. Economy Mocks with a Fake Housing Market Recovery

First-time home buyers is what the housing market really needs right now, according to Michael Lombardi, author of Profit Confidential. As a result, the housing market is seeing a rise in the home prices.

New York, NY (prHWY.com) February 6, 2013 - First-time home buyers is what the housing market really needs right now, according to Michael Lombardi, author of Profit Confidential. In his recent article "What Recovery? 10.7 Million Homes Still Have Negative Equity", Michael expresses his concern that presently, there is a frenzied activity in this sector in which large institutions are buying up homes in large volumes for increasing their profits, while comparatively, the individual buyers of homes are very few in numbers. In fact, the latter are the ones that contribute most to the recovery of the U.S. economy.

Michael Lombardi observes that supply of homes that have been foreclosed or that are empty have been dwindling because they are being bought by financial institutions like the Blackstone Group L.P. (NYSE/BX). As a result, the housing market is seeing a rise in the home prices. He observes that such financial firms find the cost of investing in the stock market quite high while the returns in the bond market are not lucrative enough. Therefore they have shifted focus on buying houses at quite cheap rates and renting them out for good money.

The U.S. economy has been witnessing the fact that nearly 22% of the entire residential households, which means that about 10.7 million homes had negative equity in them after the third quarter of 2012. Also, 5.29 million homes in the U.S. housing market have either defaulted on their payments by a period of thirty days or more or are in the stages of foreclosure. Hence Michael feels that the recovery in the housing market is not real and it is not doing any good to the economy. Even Robert J. Shiller; one of the founding fathers of S&P/Case Shiller Home Prices Index, is in agreement with this opinion and believes that the housing market is still a "somewhat risky investment".

As it looks, the U.S. housing market has a long way; to the tune of very many years; almost a decade, to make it to the path of a modest recovery, to say the least. When in the past there was a lull in the home prices, the lack of mortgage qualification oversight of the U.S. government came to their rescue. The scenario of rising prices today is due to the big financial institutions that are buying the houses.
Read More: http://www.1realestateinvesting.com/real-estate-market/

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Tag Words: real estate market, housing market

Categories: Finance

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