A colleague of mine personally replied to my last blog post on this Inside Real Estate titled “Media Loves Drama”. His reply: “The reason home sales are down 27% is the government has imposed such strict new guidelines that fewer people can qualify for a mortgage these days…”
My response: I agree with you that, unfortunately, it is almost impossible NOW for people to get mortgages. But, the looseness and carelessness of being able to get mortgages in the late 90ies to 2007 is what put this nation and other large countries in the pickle they are in today – lenders granted shitloads of mortgages to people who didn’t qualify to even buy a bicycle on credit – and you know that.
Now, everyone feels sorry that the government intervened forcing lenders to go back to their original modi operandi and lending only to those who have a near perfect FICA score.
Let’s not forget that in the past 40 years, the American Credit Card Society of Lenders (in don’t know if there is such a recognized organization that really exists but I am naming it so for this essay) has brainwashed people with mass-media hypnosis for people to spoil themselves with the “get it now and pay for it later” propaganda thing…And retailers figured out how to sell their products on TV by making sure their goods are aired immediately before a Visa or Master Card commercial. Today, we are all addicted to “get it now” and we live way beyond our means.
I really don’t know the answer to the big picture but I think that making loans easier to get to the financially struggling class would only help selling real estate but I am afraid that it would not help the recovery of present and future mortgage delinquencies. Maybe a great part of the solution would be to rectify the credit card mayhem. Perhaps, the first step to an immediate correction to our pecuniary unbalance should be to open Betty Ford type clinics in all small, mid-size and major cities in the US and start a mass credit card detoxcication. But, the economical side-effect to that would be devastating to the other vital organ of our economy: continuous production.
Does anyone out there have the magical answer to straighten this mess? Please come forward… God are you there?