New home sales up, good news for the economy, Chapter 7 bankruptcies will decline, fewer foreclosures caused by homeowners walking away from underwater homes, right?
Not so fast.
Government interference in the free market, in the form of the first time buyer tax credit, makes things look better than they are.
The big increase was in existing home sales, which does not boost the economy like building a new house does.
And, according to the Calculated Risk blog, the vacancy rate in residential rentals is at an all time high.
Supply and demand, not much pressure to build new homes when so many old ones are empty.
Of course, it takes people with jobs to buy homes, old or new, and in Michigan we are short of those, with our 15% unemployment rate.
And people who have jobs, but are worried about keeping them, do not buy many homes.
I estimate that rate in Michigan at north of 80%.
Impossible to get re-financing if your home is underwater, that is, worth less than what is owed on it.
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