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31 May

As we called it, Double Dip Housing has arrived

Here are latest from S&P/Case Shiller report out this morning.

• 4.2 percent decline in Q1 of 2011, 2.9 percent from one year ago.

• The 10 cities fell .6 percent in March

• Top 20 cities fell .8 percent in March

What's probably most concerning and begs to question, what happened to the home buyer tax credits which were supposed to stimulate the economy and housing market (not necessarily in that order)?

Perhaps the best news to come out of this will be evidence that mortgage rates will remain low as yields become subject to basic economic supply and demand. With new mortgage transaction counts down, there just isn't enough fixed income products out there to buy outside of corporate bonds and US Treasuries..

To further the point, the National Association of Realtors released an article the other day verifying the median income of real estate agents has fallen 22% to $34,100? Median income….half make more and half make less. Also, a mere 16% of national real estate agents made 6 figures last year. I’m sure you’re curious to what that number represents and it’s 176,556 agents.

Ok, so all this wonderful news is out there. Here's our take on how to truly jumpstart both the housing industry and this economy.

• Bring back down payment assistance. I know the GSE's (Fannie Mae and Freddie Mac) despised these buyer assisted grant programs. Here's how the vast majority of them worked: Seller of the home (at closing) would make a "charitable donation" to a Non-profit organization (say a church), the church in turn work pocket a $900 admin. fee but remit the rest of the month (at times up to $10,000) towards the buyers closing cost. True the default in loans structured in the aforementioned way had higher default levels but now that HUD has grossly increased both the initial upfront Mortgage Insurance Premium and Monthly Premium, there's got to be a pretty decent model which supports a 3-6% default and still ensure "success" in homeownership.

• Housing is only so important to an already service oriented country like the US. Manufacturing MUST return. Leadership in Washington DC must bring back significant incentives to "defend" this countries manufacturing arm.

• Flat tax. If this county remains (as we suspect it will) a service oriented country, we must tax it accordingly whereby those leveraging the most services or consuming the most goods, in turn pay more.

Simple, now where do we petition these simple requests?

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