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un­der­stated,” said James Frischling, pres­i­dent of NewOak Cap­i­tal. The com­bi­na­tion of stingy lenders and weak bor­row­ers “doesn’t bode well for the hous­ing mar­ket,” he said, but he is op­ti­mistic that lenders will loosen their stan­dards and en­able the mar­ket to grow again.

“With so many banks look­ing to put money to work, this may yet prove to be a buy­ers’ mar­ket — with some pa­tience,” he said.

But Pa­ter Tene­brarum, a hedge fund an­a­lyst, said the seem­ing re­cov­ery in the real es­tate mar­ket in 2012 and 2013 was noth­ing but an “echo bub­ble” fu­eled by the Fed’s le­nient poli­cies and the govern­ment guar­an­tee on more than 90 per­cent of mort­gages made since the re­ces­sion through Fan­nie Mae, Fred­die Mac and the Federal Hous­ing Ad­min­is­tra­tion.

The Federal Re­serve has been pur­chas­ing Fan­nie’s and Fred­die’s mort­gage bonds for sev­eral years to drive down mort­gage rates. A year ago, rates on 30year loans reached a record low near 3 per­cent.

In the Fed’s move to grad­u­ally re­duce and end those pur­chases start­ing in De­cem­ber drove rates to over 4 per­cent and pre­cip­i­tated the mar­ket slump.

“There is no rea­son to be­lieve that the echo bub­ble is any more sta­ble than its pre­de­ces­sor,” es­pe­cially given the govern­ment’s overwhelming role in fos­ter­ing the lat­est re­cov­ery, Mr. Tene­brarum said, con­tend­ing that hous­ing’s brief re­cov­ery may turn out to have been en­tirely “il­lu­sory.”

“It is prob­a­bly best not to pin too much hope on the echo bub­ble,” he said. “Wall Street firms buy­ing up homes in [bankowned fore­clo­sure]-to-rental schemes don’t rep­re­sent or­ganic de­mand, and in fact only serve to price out po­ten­tial first­time buy­ers.”

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