Very Vintage Vegas

One Of The Many Reasons Why I’m An Optimist About The Las Vegas Housing Market

December 20th, 2007 Categories: Las Vegas Real Estate News, Market Conditions, Mortgage

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There’s an amazing voice out there in the Blogosphere when it comes to using real estate as an investment. He doesn’t do “homes that you live in”. He specializes in homes that you rent out and use to create TRUE wealth and eventual retirement income. We’ve been reporting about things like new FHA programs for re-financing; Hope Now Alliance to help avoid foreclosure from adjusting mortgages; raising your credit scores to help you be a strong buyer and many other things that are happening or being proposed to alleviate the “housing mess”.

Bawld Guy, in his post yesterday pointed out a very important piece of the puzzle, which is money supply. It’s the contraction of the money supply which had the banks shut down their mortgage lending. There’s no shortage of willing buyers. The shortage is from ABLE buyers. The middle ground in lending is safe and prosperous and advantageous for everyone.

Banks look at your assets, your credit and your income. Right now, you have to be “excellent” in all 3 categories to get a home loan. 2 years ago you could be “awful to fair” in all 3 and still get a loan.

The crisis will end, and we’re starting to see signs of it now, when you can get a good loan with any two out of 3 of the categories. Then our working families will be able to get loans again. Liquidity in the banking and mortgage system is the key to this happening.

Bernanke Goes To The Statue of Liberty Play — Bank System Scores  should be read, but here’s the money quote: 

If you’re bleeding out, you don’t need a sandwich, you need a massive blood transfusion. Duh.

As Bernanke wrote — the Great Depression might’ve been avoided but for the Fed’s decision at the worst time imaginable to actually contract our money supply when a tsunami sized infusion of cash was desperately needed.

My money remains solidly on Bernanke. The last 18 years of rates being lowered too far to fast, then reacting to the unintended consequences of those moves far too late and with too many rate increases, are over.

It’s time to serve some cheese to go along with all that whine.

From now on, if you believe anything, believe Ben Bernanke’s relative valuation of money supply over interest rates as the most effective tool at his disposal.

I’m a staunch money supply guy, and have been since forever.

Now we watch and wait to see how this all plays out.

I wonder how many times Wall Street will fall for the Statue of Liberty play? While they demean and insult Ben for his actions, banks are now acting like banks again.

Actions speak louder than whining every time.

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This entry was posted on Thursday, December 20th, 2007 at 1:06 am and is filed under Las Vegas Real Estate News, Market Conditions, Mortgage. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

1. Jeff Brown said at December 20th, 2007 at 8:13 am

   Appreciate the support Jack. As I was watching a recording of Larry Kudlow’s show yesterday, it was interesting to hear a Bear doing his best to convince us we need to prepare for recession or worse — then he again brought up the ‘D’ word.

   They’re standing at the cliff’s edge and know it’s either them or us. They also see the same trends we see, and it scares them silly.

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