Trifecta Keeping Housing Bubble Inflated

A bit of news you may have purposefully missed: the Senate recently voted 60-38 to reinstate the elevated loan limits for Fannie Mae, Freddie Mac, and the Federal Housing Administration. With the “limit” set at $729,750, prices are sure to stay inflated in bubble states like Califo
ia and New York, though it is a wonder that such a figure is even plausible given that the typical American household makes roughly $50,000 a year. Our politicians are also seeking to extend residential visas to foreigners looking to buy at least $500,000 in real estate, never mind the fact that the median home in the U.S. costs around $180,000. Democratic Senator Chuck Schumer describes his bill, which is co-sponsored by Senator Mike Lee, a Republican from Utah, as a way boost demand in the sluggish housing market. The bill would require foreigners to spend at least $500,000 on residential real estate and at least $250,000 for a primary residence. A similar policy in Canada has proven to drive home prices up, as a near quarter of home purchases are by wealthy foreigners.
Since the housing bubble burst nearly $7 trillion in real estate wealth has evaporated, representing a fall of close to 30 percent from the peak in equity. Part of this is again, due to the fact that many home buyers can only afford lower priced homes. Additionally, nearly 3 million foreclosures have concluded, not counting the shadow inventory of nearly 4 to 6 million properties created by the banks. With the government and the banks working, seemingly in a concerted effort to keep prices artificially high, there seems to be little we can do to avoid the state of housing welfare that currently continues to stagnate our economy. Instead the government should be focusing on fostering an environment to create jobs, taking all hands away from the housing market, though as it stands; it seems the only way this will occur is if their banking overlords order them to do so. We do not need another bail out for the housing market; we need a healthy environment for small business to thrive which in turn creates jobs.