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Housing Plan: Five Things Investors Need to Know

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  • Housing Plan: Five Things Investors Need to Know

    By: Jeff Cox, CNBC.com | 19 Feb 2009 | 02:51 PM ET

    Investors hoping the government bailout will rescue the housing industry are making a risky bet, judging by analysts' reaction to the plan.

    While the plan that President Obama unveiled Wednesday certainly will help many homeowners at risk of foreclosure, the chances that the rescue will trigger a housing recovery that in turn will boost stocks are dicey.

    In fact, analysts see the effects on the market as minimal.

    "When you add it all up, it's another one of those plans that has some good elements and some bad, but it isn't a cure-all," says Mike Larson, an analyst with Weiss Research in West Palm Beach. "It will avoid foreclosures for some borrowers, but it's not going to stem the tide in the housing market."

    Reaction to the plan can be broken into five observations:



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  • #2
    number 4 of the 5

    The worst-case scenario is that the plan to prop up troubled mortgages will not address the need for housing prices to fall to sustainable levels.

    this to me is the 1 everyone keeps dancing around and refusing to face in my humble opinion
    have you defeated them?
    your demons


    • #3
      Exactly. And that is equally applicable to NZ, where the banks created a property bubble via the carry-trade on the yen. Prices have to get back to 2001 levels before there will be any serious interest in residential property. In other words, the bubble has to be allowed to burst. The fact that this will financially wipe out thousands of NZ families does not mean that anything should be done to stop it, because there is nothing that can be done to stop it. Those families made a leveraged bet, and they lost. Their salvation lies in the local WINZ office.