More Help From The Government For The U.S. Housing Market?
January 11th, 2012 categories: Chicago Real Estate News
Should the federal government spend more money to boost the country’s still-sluggish housing market? At least three of the top officials with the Federal Reserve think so.
And it’s hard for me to argue against their point.
The Reuters news service recently reported that three Federal Reserve officials, in separate speeches, argued that the federal government should provide additional financial stimulus for the nation’s housing market. By doing this, the officials said, the government would help speed the country’s economic recovery.
The Fed officials — William Dudley, president of the New York Federal Reserve Bank; Elizabeth Duke, governor of the Federal Reserve; and Eric Rosengren, president of the Boston Federal Reserve Bank — said that the still-shaky housing market was preventing a more robust recovery of the national economy.
According to the Reuters story, U.S. housing prices have fallen 33 percent since 2006. That has caused an estimated $7 trillion in lost household wealth. The story also said that about 12 million U.S. homeowners are underwater on their mortgage loans, owing more on their loans than what their residences are worth.
Dudley in his speech, which he gave in New Jersey, said that legislators need to take more action to kick-start the housing market. Doing so would speed what Dudley referred to as the “frustratingly slow” economic recovery and lower the country’s “unacceptably high” unemployment rate.
Dudley suggested that the government provide financial support to homeowners who have lost their jobs. He also suggested that Freddie Mac and Fannie Mae reduce the principal balances on loans to homeowners who owe more on their mortgage loans than what their homes are worth.
It’s good to see the Fed officials encouraging the government to take a larger role in supporting the housing market. Like it or not, if the housing market in this country is struggling, so is its economy. The two are linked together. Because of this, it’s important for the government to do whatever it can to boost the health of housing in the United States.
