Good Morning Middle America, your King of Simple News is on the air.
U.S. NEWS: I can see that our government needs my services at this difficult time and place. They need for me to explain a few economic details that are bewildering to our leadership. Of course, third grade math is bewildering to our leadership, so such things as a 14% drop in mortgage applications is pure wizardry in comparison.
This calls for an in-depth study of the dwindling mortgage application situation, a study applying the advanced method of Mikeronomics.
To begin with, the latest month of foreclosure proceedings was 115% higher than the same month a year earlier. Throw in the steepest continual decline in home values seen in recent history and what you have are suicidal real estate people.
Asking someone to purchase a home in this market would be like watching a bungee jumper hit the ground and asking if anyone else wanted to try it.
However, there are far more serious issues to the housing market than those just discussed. After years of allowing anyone who could pass the fog-on-the-mirror-breath-test to qualify for a no-down low-down deal, we have about weeded out all of the buyers who shouldn’t have been given a loan to begin with, which seems to have accounted for the majority of the housing sales.
Going from zero down without the bothersome proof of the income necessary to pay the loan back, to having to provide a down payment and actually having a job, seems to have slowed down the process even more. Go figure.
Add to this the fact that some 3 million folks are putting their homes back on the market due to foreclosure and you would think that would be pretty much be the icing on the cake…wouldn’t you?
Well, not quite. There is the issue of job losses. For the past 6 consecutive months, the U.S. rather than reporting job gains in the hundreds of thousands, has instead reported job losses in the hundreds of thousands.
Under the new ridiculously strict lending rules, unemployed people can no longer qualify for a $300,000 home loan. To make matters worse, the unemployed people aren’t making payments on their present homes; a fact that is totally mystifying to Congress.
Congress people have difficulty understanding the correlation between unemployment and not having any money. After all, most of them haven’t worked in 20 years and get a check every month.
You can see that my Mikeronomics presentation of the housing debacle would be extremely difficult to comprehend for pre-schoolers and Congress people, but for Middle America… it’s crystal clear.
Tomorrow we’ll take a little trip into the future of housing.