Today, after weeks of speculation, the FHA announced their plan to secure the solvency of the Insurance Fund. And it is NOT good news for Homebuyers, and therefore, NOT good news for sellers either. I’ll discuss the particulars in a minute; but first, let’s look at how this is the THIRD nail in the coffin for First Time Homebuyers (who
There is no doubt that prices in the lower end of the market have fallen rather dramatically over the last several years. Much of this loss in equity occurred as people were unable to pay their mortgages, and the homes went to foreclosure. Many were quick to dismiss this dilemma as the result of questionable mortgage practices that allowed unqualified buyers to purchase a house they ultimately couldn’t afford.
Though that is true in many cases, it is not true in all cases. The current economy has put financial pressures on families at every level of the economic ladder. And, because of that, we are beginning to see a surge in foreclosures, not just in the lower and mid-tier price ranges, but instead at every price point including houses above $1,000,000.
Operating in the current real estate market is no easy task. Whether you are selling a house, buying one, or doing both, it requires the skill of a surgeon to carefully slice through the layers of information available in order to get to the core issues. At the same time, you must have the insight of a psychologist to deal with the rapidly changing nuances of the continuously evolving landscape.
What will happen to house values as we continue through the year?
When will interest rates return to more normal levels (7-8%) and how will that affect my ability to borrow?
There is a plethora of questions that have no easy answers. So how do you assure that you have a healthy real estate transaction? Just like your health, you depend on the counsel of a trained professional. This begs the question: how do you pick a good real estate ‘doctor’?
Coming into 2010, there are many people trying to decipher all the data that is being reported regarding the housing industry. The main goal is to try and bring clarity to a market that has been clouded with confusion for the last two years.
We must prevent ourselves from looking for a simple solution that will justify what we want to happen. We must not allow the truth to overshadow the facts. What do I mean by that? Let me give you an example.
The Truth: the housing market is improving.
The Facts: Home prices are still falling and will continue to fall.
"Fear always springs from ignorance."
-Ralph Waldo Emerson
Unlike last year, we are better prepared for the challenges ahead of us. Knowing how the market is moving will help us in the decisions we make. Here are a few things to consider when making your move into the New Year:
Mortgaging Interest Rates – Rates remained at historic levels this past year because the federal government, realizing they were an important component to any economic recovery, took steps to guarantee they would stay low. The Fed has already announced that the measures they have been taking will come to an end as of March 30, 2010. After that, the private sector will be on their own to set what they believe to be a fair and reasonable rate based on current economic conditions.
Where were rates before the Fed got involved? They were hovering around 7%. We believe there will be a slow climb back to the 6 ½ – 7% range as the year unfolds. We believed this uptick would start in late March. However, after seeing rates rise almost ½ point in the last month of 2009, this may occur sooner.