Housing Market Recovery in Full Swing, Just in Time for the Student Loan Meltdown

Receiving Wide Coverage ...

Housing: The same market that dragged the U.S. into a nasty recession "is now a key economic driver at a time when other sectors are slowing," the Journal reports this morning. While GDP growth limps along and businesses fret about the fiscal cliff, "an improving housing market is buoying consumers' spirits and giving the economy its biggest lift since the real-estate boom." Mortgages remain hard to come by, but to the extent they can take on debt, homeowners are feeling more confident about doing so, and home equity borrowing is on the rise this year, the article says. The Journal's "Heard on the Street" column argues that the housing recovery could even "escape unscathed" from the broad economic damage that would occur if Congress failed to make a budget deal before Jan. 1. An economist quoted in the Post cautions that the housing market is about to head into the slow holiday season, so the price gains registered in September will be "the last hurrah" for the year. And in the bigger picture, it may take "more than a decade" for prices to rebound enough to erase all the negative equity weighing on consumers, he says. Meanwhile, the Times reports that an FHA rule change is encouraging development of condominiums in mixed-use, rather than residential-only, projects.

Consumer Debt: Overall, households are still paring debt, according to a New York Fed report. But student loan debt is swelling, and nearly all those loans are now "made directly by the government, which asks little or nothing about borrowers' ability to repay, or about what sort of education they intend to pursue," according to the lead story in today's Journal. (Remember that two years ago, the Obama administration eliminated private lenders from the federally guaranteed student loan program, in an effort to save money.) Delinquencies on student loans are also rising as credit performance improves or holds steady in other consumer debt categories. Wall Street Journal, Washington Post

Wall Street Journal

The paper has a fun front-page "gotcha" feature on executives in various industries who "made highly beneficial trades [in their own companies' stocks] shortly before their companies made market-moving news." The financial services industry is represented in the article by VeriFone Systems CEO Douglas Bergeron. Like other executives, he executed his fortuitous stock sales (before a Justice Department suit to block an acquisition hurt the POS terminal maker's share price) as part of a preset trading plan. Companies don't have to disclose many details of such plans, resulting in an opaque system that "can both raise suspicions about trades that are innocent, and provide cover for others that are less so," the article says.