For all the efforts to clear the U.S. housing market, the sheer scale of the real estate crash defies even the most aggressive approaches like short selling. What’s needed to get the country out from under a crushing debt crisis and inventory glut is an idea that’s been keeping markets healthy and wealthy for decades, Down Under.

In Part 1, we started the countdown towards May 1, the Day After. In Part 2, we offer ten suggestions for REALTORS to stay in business when the dust settles.

If the housing market fell nearly 17% the month after the original housing tax credits were supposed to end, what’s going to happen when they really do come to an end? Are REALTORS ready for the Day After?

FHA is about to change the rules for backing future loans. Will REALTORS be ready when the government-backed subsidies get harder to come by?

Some questions Matthew Ferrara thinks REALTORS should be asking of FHA – before it’s too late.

The real estate and mortgage industries are paying the price for Fannie Mae’s free-lunch fraud. Looks like the people who couldn’t afford “affordable housing” most weren’t just consumers, but its most vocal advocates.

So the government has launched another wildly popular subsidy program with its Cash for Clunkers program, offering consumers up to $4500 for trading in their classic cars for purchasing a new one. In fact, the program is so popular that more than 250,000 trades have already been made and the original $1 billion earmarked by Congress spent in days. Uncle Sam will just request a credit increase on his credit card, though, potentially finding another $2 billion to keep the program going. Reasoning: trading in old cars for new ones creates consumption, which trickles-down income throughout the automobile industry network of suppliers and manufacturers. Plus, it preserves jobs and cleans the air. Never mind those trades going to “foreign” car companies,or that $1 billion is a pittance when spread across the automobile “industry.” Still, it got me thinking. Why not copy the Cash for Clunkers program and apply it to the housing industry by paying people to tear down their used homes?  

Yesterday, President Obama announced he was prepared to break the law. After blaming the senior debt bondholders of Chrysler for pushing the company into Chapter 11, he sanctioned a plan to abrogate their covenants and force them to take pennies on their loaned dollar. No matter that their bonds were secured by the company’s assets. The rights of “speculators” are easily swept aside in populist frenzies. Notice how the President didn’t blink a teleprompter-eye when he stood with the union workers, the families and the communities – while transferring to them 55% control of the company assets. American lenders filled with American workers who loaned American savings to Chrysler for decades were expected to simply take massive losses. Apparently it’s no longer American to repay one’s debts. The Bully Pulpit declared “needs” more important than “rights.” And since mere mortals barely understand all this financial jargon, especially  REALTORS, the rule of law was quietly killed. Contracts, it seems, aren’t worth the paper they’re written on in America. REALTORS had better beware.

Yesterday, Chrysler announced it was going to suspend production at ALL of its North American factories until mid January. This was excellent news – for those of us who believe business is a rational process of allocating scarce resources to meet consumer demand. Others may think it’s just a political ploy to get politicians to fork over taxpayer money for the “poor, hardworking (?) UAW laborers” who will go be furloughed over the holiday. Regardless of your stand on the auto maker bail out (would just one new outlet please interview Honda or Toyota during this debate?) there remains a solid, clear lesson for the real estate industry within Chrysler’s decision to halt production.

Well, Bailout Nation (as CNBC’s Larry Kudlow calls it) is at it again – this time trying to jam a $34 billion dollar “loan” with “conditions” through Congress but with a twist. Rather than just giving the money to the Little Three American Auto Companies (who, by the way, we could purchase for less than 15 billlion) and especially because we don’t want their greedy, evil CEO’s giving themselves bonuses with it, we’ll appoint a Car Czar to oversee the money and their plans to “become viable.” Interesting plan. Considering the real estate industry is also looking for a bail out, should we consider asking for a Housing Czar?

I think I’ll apply for the job as Federal Treasurer next month. Apparently, all you need is an abacus and a few simple thoughts and you can at least blow a trillion or so taxpayer dollars. If you’ve actually studied economics, – well, hey, maybe consumers can just fix this mess by making one small change in their approach to purchasing a home… .

Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself. – Mark Twain, a Biography If at first you don’t succeed, try to destroy the economy again. That seems to be Congress’ motto these days, as they prepare to vote on the “revised” bailout bill.This, time, however, the proposed bill is so full of spending pork – from exempting children’s wooden arrows from excise taxes to increased cover of rum excise tax revenues – that proves Twain’s other saying that there was nothing a Congressman knows that couldn’t be taught to a flea. What a scam!

Only in the United States Congress can a plan to destroy the housing industry and credit markets be called a “rescue” plan. It’s almost as farcical as calling  “card check” bill that effectively kills secret voting for unions a “secret ballot bill.” Far more troubling, however, is the fact that the elements of the plan are laid out – in plain sight – for everyone to see and think about. Why, then, does the real estate industry and average homeowner, not see the danger?

I just received my copy of the 2008 Annual Member Profile from the National Association of REALTORS. Amazing – just amazing – how many of you aren’t going to be around next year. But this isn’t another requiem for the change-resistant REALTOR. Believe it or not, this posting will explore a simple suggestion that NAR could implement to speed up the housing market recovery. And let’s be clear: Except for places that are still returning to market norms (some people call them “declining or falling” markets) a lot of places in America are bouncing back (or continuing along just nicely) like Des Moines, Austin and Charlotte. So for everywhere else, where the market doldrums are more media hype than market reality, it’s time for REALTORS to stop waiting around for the market to fix the consumer. It’s time to do something about it. The navel-gazers have been shuffling around whining that the Fed, the market, the interest rates, the consumer, everyone ELSE other than the REALTOR is holding the market back. Using our famous contrarian logic, what do you think we think? Right – maybe it’s time for the REALTOR to heal thyself. Sales is a perception-driven business. People purchase [...]

Is it possible that the Federal Reserve, despite all of its protestations to the opposite, really hates the housing industry? Could Bernanke and the rest of the Fed cronies not only be totally incompetent, but actually have a vendetta against the middle class? Is there any evidence that the Fed is out to absolutely destroy the housing market even as it professes to be trying to save it. You bet. And for proof, here’s a little Economics 101. The housing market is a commodity market. Producers create an asset whose price fluxuates according to two factors. The first is consumer interest. The second is credit. Even in the “worst” credit markets, consumers can frequently create bidding wars for housing – for select locations, unique properties or investments that have a significant potential of upside over time. At the same time, during the “best” credit markets, consumers can simply be uninterested in the inventory on the market. For example, 1 out of 5 buyers in the last few years (and next few) was a Baby Boomer; and they aren’t in the least interested in 4 bedroom, 3 bath with one acre of yardwork. Of course, builders make more profit if they [...]