It’s about time the Federal Government woke up and realized the average consumer in the US needs as much if not more help than what is given in “bailout bucks” to big institutions.
The Federal Reserve and Treasury Department today unveiled a plan to pump $800 Billion into the US economy, in an attempt to jump start lending by banks to consumers and small businesses.
Moving in Right Direction Slowly
The government “hopes” that these initiatives will enable more money to flow to consumers in the form of loans than what has occurred to date with previous bailout plans.
Accordingly, a big chunk of the $800 Billion will include a purchase of up to $500 Billion in mortgage backed securities that have been backed by Fannie Ma, Freddie Mac and Ginnie Mae, the three primary government sponsored mortgage finance firms set up to promote home ownership. It will also buy another $100 Billion in direct debt issued by these firms.
The intent is to help consumers by making money available to investors who are interested in buying loans bundled together into securities, making it easier and more profitable for banks to loan money to consumers and small businesses.
Raise Consumer Confidence?
No one including the Federal government knows how much or how fast this is going to help consumer confidence, making more money available and what impact it will have on the real estate industry. Although we do know the lack of affordable consumer credit undermines and weakens consumer spending, which impacts all markets, including real estate.
We think it is a step in the right direction from the Federal Government. But, it’s going to take at least a couple of months for any impact on the broad consumer market.
State Government Action Complements Fed
Our Governor, Jim Gibbons met with local banking officials earlier this week and they’ve announced a new program, the Neighborhood Stabilization Program, which is geared towards easing some of the impact foreclosures are having on our local market. This program should help to boost consumer confidence and reduce the inventory of foreclosed homes throughout the Las Vegas area.
The program is designed to create opportunity for working families in Southern Nevada who make less than $76,000. per annum with another portion of the program geared for working families making less than $31,900. per year. By enabling them to purchase rehabilitated foreclosed homes with special mortgage rates.
The program is designed to provide about $65M in funds for Southern Nevada, which should enable the purchase, renovation and resale of approximately 1,000 Las Vegas foreclosed homes priced less than $220,000.
We’d Like to See More!
We think the State and Federal Government consumer stimulus programs are steps in the right direction. But, we’d like to see much more of the same and we also feel state and federal government could have moved much faster earlier in the year, which would have helped to forestall some of the negative impact foreclosures have had on our local market.
Investor Confidence Returning
There is so much doom and gloom in our national media – no doubt we are living through challenging times. But, we are selling homes to investors and many are telling us they believe Las Vegas real estate will outperform the stock market and has tangible value that can’t be impacted by corporate malfeasance! We couldn’t agree more!!
