Last week was quite a roller coaster of financial emotions. On Monday, the House had initially rejected the Rescue bill and by the end of the week in was back in President George W Bush’s hands to sign. Within those 96 hours, stock markets panicked and confidence in our economy was severely shaken. But with the rescue bill finally in place, here’s what home owners in California can look for in the future.

Some think Bailout Is Just Not Enough
The Sacramento Bee wrote that the Rescue Bill simply won’t be enough to cure the foreclosures in their region of Sacramento. The San Jose Mercury News also writes that the bailout doesn’t detail specific provisions for “strapped homeowners” and will do little to cure this economy.

Meanwhile, the FHA has also stepped in to provide insurance of up to $300 billion worth of troubled mortgages in their Hope for Homeowners program. Then there are individuals who are saying that the bailout bill was wise to avoid specific details, as it places most of the responsibility on the market itself to correct the housing industry.

Giving the Bailout Time to Work
Financial analysts concur that this economy will get worse before it gets any better. And without a bottom in sight just yet, a lot of government officials and individuals will be under pressure to simply do something. There are a few steps that California has already taken, mostly addressing the issue troubled homeowners either facing foreclosure or already in the process.  But the notion that we must hit rock bottom is definitely a cause for concern. If you take a look at the trends in home prices in California, we saw a dramatic increase in home values over a period of many years.

What we can’t expect is for this mortgage crisis to cure itself within a fraction of that time. It’s been addressed by many before, but home prices in California need to return back to “normal” levels; unfortunately, this is what’s putting so many on the edge of their seats. Everyone wants this troubled economy to improve and for the housing industry to return back to normal, but people aren’t that excited about losing the value of their home. I wouldn’t be either, but it’s a fact we must face. If we expect these “bubble” values to continue, and avoid the inevitability of the “normal” values to return, it’ll be a very long time before we can expect any turnarounds in this economy. Expecting the bill to cure markets overnight is simply too optimistic.  For right now, the bailout rescue bill allowed us to avoid a collapse in the markets; a glimpse we were able to catch post Monday’s rejection.

 Here’s Some Links to Interesting Reads:

LA Times - Giving the Bailout Time

InsideBayArea - Bailout will Restore Confidence, slowly.

(11 votes, average: 4.91 out of 5)

 Loading ...