The minute the president signed the unbelievably big and complex housing bill, everything changed for housing in america. yes, i have seen a couple of dozen stories on the internet, each saying that the bill will have only a minimal effect on problems we now face.

all of these stories can be traced to a quick statement by one lone wall street analyst. he was apparently Determined to be the first to speak.

so he did not take the time to study this bill. well, i did take time. a lot of time. as i told readers of my hotline i was up almost all night before it passed, sTudying this immense bill (now a law)

I FOUND A LITTLE-KNOWN PROVISION

OF THIS BILL THAT IS NOW being REVEALED. IT WILL EXPLODE ACROSS THE AMERICAN

REAL ESTATE AND BANKING

LANDSCAPE LIKE A NEUTRON BOMB!

IT WILL BLAST AWAY MANY OF THE NEGATIVE FACTS ABOUT HOUSING THAT NOW HAVE TERRIFIED HOMEOWNERS, BANKERS, realtors, DEVELOPERS, BUILDERS, INVESTORS AND REAL ESTATE LAWYERS. in their place one major new offer will appear. IT IS THE BIGGEST SINGLE FAVOR THE GOVERNMENT HAS EVER DONE FOR REAL ESTATE.

I have never seen the American Press work so hard to scare People as they are doing now with the Housing situation. (A Boston newspaper ran a headline about a woman who blew her brains out the day her home was being foreclosed. Far down in the story you learn that she had not made a mortgage payment in 36 straight months.) The Paper’s idea was to scare its readers. They tried to make People think there was NO HOPE to stop a housing slide.. The same mood existed in America early in 1942. American had been caught by surprise at Pearl Harbor. Looking back now in media records I can see how the Press was so full of gloom that a big majority believed we would lose World War 2.

But then Jimmy Doolittle led a band of brave American fliers in a bombing raid on Tokyo, from a U.S. carrier. The raid was small and did little physical damage. But it was a knockout blow to gloom and doom in America . I think the Housing Bill will be that big. Forget about the provisions that bail out delinquent homeowners and some near-bankrupt lenders. Look in the fine print. See the $7500 Federal tax credit provision!

Starting now, American first-time

home buyers can get a $7500

tax credit from the Government.

The tax credit will let People buy a home (if they have not done so in 3 years). This credit was proposed months ago and seemed to be dead.

But Chairman Barney Frank (Mass.) was adament. He told those in theaSenate who tried to kill it that if they refused to vote for this tax credit he would stop the whole Housing Bill- including bailouts for lenders, speculators, investors and Wall Street firms. Give him this tax credit to jump-start Housing he said, or forget the whole deal. The Senate tried to limit the credit for use only in buying foreclosed houses. No deal, Frank said. It must apply for the purchase of every new or used house… or no Bill..

Lo and behold, when the bill passed the Senate and showed up on the President’s desk, the full tax credit was buried deep in its pages, ignored and forgotten by many. As I said, it is a neutron bomb. When a smaller tax credit was passed in 1986, the moribund housing industry roared back to life. The National Association of Homebuilders and the National Association of Realtors are aware of this little-known provision and they are very excited that Chairman Barney Frank got it passed.

A year ago, this tax credit might have failed to turn Housing and the Economy around. But I think right now it is a near-perfect cure offered at a perfect time!

There was been a frightening decline in NEW HOMES SOLD.. I understand this decline was so bad that many Realtors did not earn a nickel last year and this could not qualify for the $600 rebate check from Washington. But notice how low the total is. We are now looking at numbers that resemble previous bottoms reached in 1982 and 1991. Given that the U.S. population grows about 1% per year, it would seem that the current low is deep enough. Housing is now at a level where a reversal could come at any time. It just needs some event to help would-be buyers overcome their fear of a new Depression – which is a common theme in the media these days.

EACH MONTH THE MEDIA LOOKS AT THE NEW NUMBERS FOR BUILDING PERMITS AND CONSTRUCTION AND SEES BAD NEWS. WE SEE GOOD NEWS.

The biggest problem facing America’s Housing industry, other than the foreclosures being dumped on the market,

is the way some builders keep adding to the total supply.

The peak of new building was reached way back in 2005.

Home sales then declined. But each month, while the media is crying in a towel over news reports of shrinking numbers for building permits and new home construction, I am quietly cheering them. This kind of restraint has caused temporary problems across the bad – from local realtors, lawyers and bankers to lumber dealers and construction workers.

But there was a payoff to this restraint, which by the way was often missing during the housing recession in 1991. As one result, despite lurid newspaper and TV headlines of massive price declines, the median price of housing has been well contained. This price pattern is fairly close to the 10% loss we predicted before this Time Out began for housing. The really bad losses appeared only in a few areas of severe over-building, where speculators bought multiple units seeking big profits.

SENIOR LOAN OFFICER TIGHTENING:

Senior loan officers rushed to shut the barn door after a whole herd of horses had run out. They were slow to react to reality. I trust they will now be slow to react to the fact that the new housing bill is the surest path for them to profit since the GI Bill opened up a monster boom in housing after the close of World War 2.

If I were them I would NOT sit on my hands. Fed chairman Ben Bernanke has read and digested the legislation that created the Fed in 1913. He knew even if no one else did that the Fed had been brought into being to stop the cycles of booms and busts running back to the 1830s. The Fed was not given life to stop inflation. The free market did that. Prices in 1913 were even with those of 1813. But what a price had been paid. Depressions, misery, stunted growth. The Fed was created to serve as a lender of last resort. If banks refuse to lend to qualified buyers they may be forced into mergers or worse!

IT WILL TAKE MORE THAN A $7500 TAX CREDIT

TO START A NEW U.S. HOUSING BOOM. IT WILL ALSO TAKE A BOOM IN BUSINESS - PROVIDING JOBS AND INCOMES. FORTUNATELY THE FALLEN LEVEL OF THE DOLLAR IS DOING THAT – NOW!

Because the media and many politicians want to hear only bad news, they are ignoring a new boom already underway. But it is boiling under our feet, like a giant volcano. Industry has fought back against imports, by doubling productivity. As a result, our exports have been exploding. The U.S. is also replacing many imports with goods made in America. Exports are now bringing lots of foreign Money to the U.S. – and that will help pay for our nexthousing boom.

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Adrian Van Eck