"Jeffers Media Theory" states that no "story" makes its way into the media without being bought and paid for by some special interest group (there is a difference between "story" and "news").
The U.S. housing market has not bottomed, and it is not even close. How this plays out could really spell the future of capitalism, or at least fractional reserve lending and "property rights", here in the U.S.
The Federal Reserve, its member banks, and the Federal Housing and Mortgage agencies are at the end of their rope. How else to explain the idea that they are now to become property managers and landlords? And what will they do if The People simply stop paying the "rent"? Are they really going to evict them all? NAFC. The effect that this will have on the "value" (price) of the non-government owned properties will be just brutal.
I have been a stone cold free-market capitalist my entire life... but in an era of Zero Population Growth ("ZPG") and over leverage (that must and will be unwound) I cannot fathom how The Powers That Be are going to enforce "property rights" on these "properties". The houses are built and there are millions of excess homes... Average fertility in America is 2 children per woman, slightly below replacement rate... extension in life expectancy has likely reached it upper limits... that leaves immigration.
Immigration is like the old Marx Brothers' joke about who would want to join a club that was willing to have you as a member... Who wants to emigrate to America? And who does America want? These are 2 quite different sub-sets of population.
The argument that the U.S. will turn on the immigration spigot to fix housing and Social Security is ludicrous. The U.S. has not created a single net job since 2000 - yet the population climbed by over 30 million. Is immigration really a solution for our housing over-supply? And if we tried to force it, would it work in time to solve the problem? Could that strategy backfire?
Technology continues to make labor, well, less laborious (energy might change this at some point... but that could be after the inflection point). Birth rates continue to decline. Immigration is winding down. And America has a massive inventory of empty homes... so much so that the Fed is OK with its members renting the properties back to the (defaulted) "home owner".
Wrap your mind around that for a moment... Ok... so what is their (The Fed's) exit plan? Trust me, they don't have a (legitimate) plan. They are taking the only course possible at the moment. The U.S. simply cannot evict everyone that is behind on their mortgages from their homes (if they did, just imagine the drain on social service, which the government has to fund, not to mention the social unrest given the bank bailouts).
So.... what is the Fed and its brethren going to do when these people stop paying their "rent"? If the Fed was unwilling to dispossess these "home owners" for failure to pay their "mortgage" are they then going to dispossess them for failure to pay "rent"? Is there a difference between "rent" and "mortgage" in this case? Just a slight nuance... people have even less incentive to pay "rent" than they did their "mortgage".
Even if the remaining suckers, excuse me - "home owners" - do NOT default and keep paying their mortgage and taxes - just who is going to buy from them when they go to sell?
Housing is a long way from the bottom. How this all plays out is fraught with a great deal more "risk" than is currently contemplated in the media.