At an AEI event on Tuesday, expert panelists joined AEI's Alex Pollock to discuss the US housing market recovery and developments in the European sovereign debt crisis. Mark Fogarty of SourceMedia outlined the recent rapid increase in home prices, highlighting the roughly 10 percent increase in the 12-month national average. Fogarty speculated that this increase could be a "dead cat bounce," or brief recovery from a steep decline.
Tom Zimmerman of UBS Investment Bank suggested that the housing sector improvement stems from a combination of inventory trends and the entry of large-scale investors to the housing sector and government programs. Jay Brinkmann of the Mortgage Bankers Association argued that a combination of government regulation, upcoming regulatory capital standards, and consequent rising mortgage origination costs were all reasons to be cautious about a sustained recovery in the housing sector.
AEI's Desmond Lachman reviewed the precipitous increase in European unemployment rates, which have approached levels of more than 20 percent in countries such as Spain and Greece, and stressed that these unemployment rates threaten to cause political and social instability. Finally, Chris Whalen of Carrington Investment Services LLC proposed that the Federal Reserve's extraordinary lowering of interest rates approximately offsets the drag of new mortgage regulation.
The great housing bubble and shrivel (1999–2012) has at last run its course, but what comes next? What should happen to insolvent Fannie Mae and Freddie Mac? Is there any way out of complete government domination of the mortgage market?
The Federal Reserve has become the world's greatest mortgage investor. Has a central-bank-financed bond bubble replaced the housing bubble? And what will be the aftermath of Europe’s sovereign debt bubble, including possible losses on deposits in Cyprus? These and related questions will be addressed by our expert panel.
If you are unable to attend, we welcome you to watch the event live on this page. Full video will be posted within 24 hours.