Readers suggested a topic on policy and recession. "'What would be the likely impacts on U.S. housing of a potential post-election U.S. recession in 2013? I’m thinking the impact on housing would be failed intervention efforts and falling prices, but then I am a known pessimist.' 'The U.S. economy will likely fall into recession in the first half of 2013 if large tax increases and scheduled government spending cuts are allowed to go into effect in January, the Congressional Budget Office said Tuesday. The combination of tax increases and spending cuts, often referred to as a 'fiscal cliff,' would sharply reduce the federal budget deficit but would temporarily arrest the economic recovery, said the CBO, which serves as Congress's budget calculator.'"

A reply, "Why not do it gradually over 3 years instead of all at once?"

To which was said, "Because any attempt to do it gradually will end in deadlock. The Republicans will insist on no tax increase and indeed futher tax cuts and increasing spending on the military and turning Medicare into vouchers, cutting Social Security and getting rid of ACA (assuming the Supremes don’t take care of it). Democrats will want to allow the tax increases to happen on some portion of the high earners and fix some of the wealthy loopholes and probably cut some military and fiddle with some other stuff."

"Neither side really wants it all to happen at once, but they are so far apart on what they want to happen instead that there is no way to get to a compromise. That is why the super committee 'failed.' I don’t think it really did. It was set up to see if the committee could come up with something that both sides would like better than the default. It couldn’t. Serious analysts didn’t really expect it to absent really clear polling that the overwhelming majority of the electorate would blame one side or the other for the economic results of the default. It tried. It didn’t come up with anything. We get the default."

One had this, "If they increase taxes (reducing disposable income), GDP goes down. If the government spends less (which means borrows less, since we are broke) GDP goes down.
So if one is willing to take on more debt (or lower tax rates further) for another 3 years, they can put off the recession for another 3 years. That is, unless we have actual growth that isn’t just increases in debt. But that hasn’t happened in many, many years."

One said, "Yep. We, being the entitled society we are, have become intolerant of any pain. Afterall, even the losers get to go for ice cream and get participant trophies."

And finally, "I see discussions about various bills moving through Congress, various initiatives designed to buoy the housing market. I read recently that over half of first time buyers are using FHA loans, while the FHA is in deep trouble. I appreciate that Congress responds first and foremost to its paymasters. But it’s still something they can’t admit out loud because it would be admitting to bribery."

"With the various legislation moving through Congress, what kinds of questions should the legislators be asking? They always ask, 'How will this impact investors' aka the FIRE sector. What kinds of tests / questions should they have for housing-related legislation?"

The Mail Tribune. "Ten of 14 components used to measure Southern Oregon's economic health declined, and another, airport passenger traffic, remained unchanged, indicating the region has yet to gain traction coming out of the Great Recession, according to the latest Rogue Valley economic index produced by the University of Oregon. 'In general, this recovery has been slow going — and particularly slow going for regions dependent on the housing market,' said Tim Duy, director of the Oregon Economic Forum at the University of Oregon."

"The economic components measured in the study range from new residential construction permits to employment in several sectors. He pointed out new construction remains below past levels, something that likely won't change until migration patterns seen until the recession return. 'Steady inflows of new residents stimulated economic gains,' he said. 'That process has halted and has not been replaced.'"

"As the U.S. economy improves, Duy said, new migration will begin and create housing demand seen before the recession. "Some of the other businesses reliant on external activity will see greater growth as well," he said. 'That's assuming there isn't a disaster in Congress or in Europe.'"

The Coeur d'Alene Press. "Last Thursday, more than 10,000 Realtors met on the lawn near the Washington Monument in Washington, D.C., in an attempt to get the attention of government. The message; Home ownership matters."

"The Federal Flood Insurance program is set to expire again in just a few days. This may create another standoff as the parties in Washington use the opportunity to leverage other agendas. The problem is that, like it did six months ago when the program last expired, it will bring many home sales to a grinding halt. Banks won't lend money to buy homes that appear to be in danger of flooding according to maps drawn by FEMA."

"How important is this to our fragile economy? When you consider that real estate sales account for 15 percent of our Gross National Product, it is very important. To allow the expiration of this insurance program will be very damaging indeed to the fragile and gradual recovery currently under way in many parts of the country including here in North Idaho."

"This recovery repeats a historic cycle for real estate but the recovery period will be longer than past recessions by all accounts. Even with government flood insurance it will take awhile to dig out of the depths to which we had fallen at the end of the boom."

"Should the flood insurance program be renewed the future of real estate is once again looking good. As we have reported here before, as a long-term investment, real estate has always paid off for those who have invested their hard-earned money for the long term while short-term 'flippers' often get burned as many did in 2008."

"Driving up the cost or making financing even more difficult through the loss of the flood insurance program, particularly in the face of the newer, more restrictive zoning could deal a blow to the housing industry that could cost this nation dearly. As we all have learned to say, 'Home Ownership Matters.'"

The Billings Gazette. "Thousands of workers chasing quick riches by flooding into the Bakken oil field have helped jump-start home sales in Billings. And the wave is starting to make Billings houses harder to find — and more expensive. At the current pace, Billings should see 300 new, single-family homes built this year, compared to 197 permits last year. But the city has a long way to go to return to the peak set in 2003 when 601 homes were built.'

"Steve Gountanis and his father built 47 homes in Arizona during the boom times when a house could appreciate $30,000 a month. But the conservative family refused invitations to build whole subdivisions, so their business didn’t fail when the housing bubble collapsed. Unless a house was pre-sold, local bankers would only lend on entry-level homes during the recession, so that’s what builders built. But Steve Gountanis, who moved back to his hometown of Billings, had his own nest egg that allowed him to bypass the banks and continue to build $350,000 homes."

"'When this market really took off three to four weeks ago, I was in a sweet spot. I sold three houses in one week,' he said."

"Whisper Ridge will have patio homes starting at $350,000 and houses starting at $400,000. Nearby, River Rock Estates subdivision will eventually have 67 homes in the $400,000 to $700,000 range."

"At the end of April, a homebuyer who qualified could pay as little as 3.88 percent interest on a 30-year fixed-rate mortgage and 3.12 percent on a 15-year loan. That interest rate is amazing, said Myles Egan, who has been selling homes in Billings for 38 years. 'I think what’s going to happen with the shortage of new homes is the value of existing homes will see very good appreciation this year because people don’t have a lot of choices right now,' Egan said."

"Despite all the positive signs on the Billings home front, this region remains tied to wider economies. 'Billings really is doing very well and the housing is showing it,' said president Wayne Nelson at Stockman Bank, the largest real-estate lender in Yellowstone County. 'But we can’t operate on all eight cylinders without the national economy getting back on its feet.'"