NewHomeSalesTumble.Feb.2011OPINION: “It appears that housing starts is hovering near some sort of bottom. That’s good news, because it only goes up from the bottom. Based on what I am reading, this could be a double-dip in the housing sector. Everything I read up to this point says that prices will fall first-half of 2011, before bottoming out. The stimulus monies used for tax credits, the purchasing of mortgage-backed securities by the federal government and the foreclosure mitigation process all had an “artificial” effect on what the real market is/was. Right now, we are about to find out what the real market is. This spring, we do not have any government induced tax credits…sales are lagging. Prices may be sliding some from what they could have been last year, only because of the foreclosed and short sale pricing…that trend will eventually end.
However, let’s complete the circle…the price achieved means that there is a sale. If you have any interest in building equity, home ownership, financial freedom; then this is the market to do it in. The Housing Affordability Index is the highest ever recorded. Buy Now, Lock-Up money at these low rates. Once new construction kicks in, which it will, the existing home prices will recover quickly.
INflation…again this morning, on CNBC; they emphatically restated again that inflation is coming…I believe that real estate is one of the best places to be for the average American when inflation kicks in.
One Last Word…the government has been buying literally, the bulk of the mortgage backed securities at below market rates. THAT WILL CHANGE. The government wants out of this business, the private sector will take it over when they can make a profit…the current market rates are to low for that to happen…Someday, When the rates go up…say 1%, the borrower would lose more than 10% in borrowing power if the payment was to stay the same. For instance, today: $200,000 loan at 4.75% for 30 years, the payment is $1,042.64. If the rate were changed to 5.75% the amount you could borrow with the same payment falls to $178,758….you need to consider where you are at today and the world that we will see tomorrow. Consider making a move in real estate, if only to capitalize on this interest rate environment.
The future will be different, it will change from where it is today…”