It sounds like the name of a B-grade movie: “Fan and Fred Meet the Feds.” But last week’s featured presentation—the bailout of Fannie Mae and Freddie Mac by the U.S. government—felt like more of a horror flick.
Yes, the decision to put Fannie and Freddie into conservatorship may prove to be the correct one. Investor confidence in the two government-sponsored entities had become seriously shaky, and a close examination of the companies’ books by government-hired auditors found that both firms were more financially exposed than previously thought.
But it’s terribly difficult to know how this story will end. The failure of Lehman Brothers and merger of Merrill Lynch with Bank of America over the weekend left the markets in turmoil. It surely won’t be the last such tumultuous day on Wall Street or Main Street. Companies of all sizes are fighting for their financial survival across a swath of industry sectors, and consumers know it. They are making decisions about how to spend their money in an economic environment where the slowing growth rate of foreclosures qualifies as relatively good news. So, is it really any surprise that Americans are signing fewer home purchase contracts?
It makes home buyers’ rising levels of satisfaction with their new homes seem positively quaint.
But old-fashioned habits can wield surprising power against the challenges facing American housing on a personal and corporate level. Just ask the residents of Henry Ford’s old neighborhood in Detroit.—Alison Rice
Boyce on Building: Quick Change
Last week, Fannie and Freddie stocks traded in a low but normal range and shareholders had a least some hope of financial escape. Today, the GSEs are penny stocks, and share holder equity all but wiped out.
Builder Bankruptcy Tracker
In an unfortunate sign of the times, builders of all sizes are closing their doors. Get the latest headlines on this difficult industry trend at the Builder Bankruptcy Tracker. Have you seen a story we should post? Let us know. If you're looking for even more local and regional news headlines, visit BUILDER’s hand-picked housing headline feed, which is updated daily with housing-related stories from major newspapers and regional business journals.
Add the latest BUILDER Online news headlines to your personalized iGoogle, Yahoo!, and Facebook pages via our widget.
Please e-mail any comments, questions, suggestions, and news tips to BUILDER Editor in Chief Denise Dersin at email@example.com.
Learn more about markets featured in this article: Detroit, MI.