Looking at the effects of the Frank-Dodd Bill on home sales

Looking at the effects of the Frank-Dodd Bill creating the Consumer Finance Protection Bureau

If you use Yellowstone county as an example of the effects of the reforms from “housing collapse” and the wild financing used in the white hot markets from around the country, Las Vegas, Phoenix, California, Miami and such. You can clearly see the unintended consequences of the reforms put in place and why the analogy of the pendulum swinging to far applies.

The Market peak in activity in closed residential sales as measured in the Multiple Listing Service in Yellowstone County was the year 2006. Using that as a base of measurement than coming forward to 2014 and comparing the economic activity in housing market,  against measures of employment (up 5.43%), population (up 14.43%), income (up 30.43%) and interest rates (down35.72%) will shows us the probable effects of the legislation that our friends in Washington D.C. created.

When employment, population and income have all gone up and the monthly payment in absolute terms is flat to slightly down (substantial down when adjusted for inflation), common sense would lead us to the conclusion that the number of homes being sold at the minimum would be the same, but more realistically you would expect them to have risen.

Looking at the sale of residential properties they show a decrease of approximately 14%, single family permits show a decrease of approximately 16%. This would lead to ask the question “what outside force is affecting the housing market?” My belief the answer to that question is the Frank-Dodd Bill creating the Consumer Finance Protection Bureau.

I will not disagree that the products created by Wall street in packaging loans and the complicit endorsement by the credit rating agencies of the “products” should be  gone. Yet instead of punishing Wall Street and the credit agencies, our friends in Washington D.C. are punishing hard working people trying to get ahead and provide shelter for themselves and their families.

What has occurred people, through no fault of their own, are being shut out of the housing market by the “reforms” of Wall Street. The housing market with reasonable credit standards and underwriting  that existed before the liar/no doc/no principle payments/balloon  loans  will protect both the integrity and sounds of the secondary market for home loans allowing  people to provide shelter for themselves and their families.

Below are the Numbers for Yellowstone county/Billings which give you the overview of how the economy has grown in our area and housing activity has not.