I have been looking at the impacts from the proposed bailout… I see three possibilities:

• As the federal government goes on their trash run, picking up the bad debt from Wall Street, the banks will once again be ready to loan money. Qualified consumers will be able to get loans again, and with the pent up demand, real estate will start to move again. We will have tested the bottom, found it solid and found a path to recovery. I call this the “Band-Aid falls off by itself.”
  

• As the federal government finds itself with all of these properties, they will realize that the value they represent is diminishing EVERY SINGLE DAY. And, in order to stop the bleeding that we are doing, they will move to divest themselves of the property ASAP. That means that they will need to price them to move. Values will plummet, but it will effectively kick-start the buying. We will find the bottom, and from there a path to recovery. I call this “Ripping off the Band-Aid.”

• Since the federal government has never been good at doing anything quickly or particularly well, this won’t be much different. And since this project represents such a huge amount of money, they will want to insure maximum damage by overseeing it themselves. Properties will trickle onto the market, devoid of any real value because it has taken so long to move them through “the system.” We won’t know where the bottom is, because consumers will see false pricing from the government homes. The path to uncertainty will be unclear. I call this “Peeling the Band-Aid agonizingly slowly.”

So, what do you think?

from GwinnettGarageGuy.com

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