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Warren Buffett told CNBC earlier this week that the residential real estate industry, and those with economic ties to it, were in a “depression.” If not for the weakness in this sector the broader economy would be humming right along.
Today, the Wall Street Journal exposes one of the main reasons housing just can’t seem to get up off the mat: it’s just too tough to get a mortgage.

Lenders are offering 30-year fixed-rate mortgages below 4%. Compared to typical family incomes, houses are more affordable than in decades. Yet home sales are languishing. A National Association of Realtors’ survey found 15% of real estate agents said their last contract didn’t close because the buyer couldn’t get a loan… If some Americans can’t get mortgages because they don’t have steady jobs or down payments or agreed to pay for more than a house is reasonably worth, OK. But if the pendulum has swung so far that creditworthy borrowers are turned away, that does unnecessary harm to the economy.

Clearly if loans, for either purchase or refinance, were just a bit easier to qualify for the residential real estate industry and the economy at large would benefit. Maybe then housing could finally find a bottom. But how do we get there? I think it needs to begin with Freddie and Fannie and the FHFA.

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