The past few weeks we have looked at an overview of the U.S. economy as a whole. Now we will look at what is likely to unfold in the mortgage and real estate markets next year. Then I will go over some opportunities that come up in this stage of the real estate cycle.
Mortgage Markets and Credit
At the end 2008, probably the biggest news is the determination of the Treasury and the Fed to try to push mortgage rate lower. Six hundred billion dollars of Fannie and Freddie mortgage-backed securities and unsecured debt are to be purchased by the Fed according to their November 25th announcement.
The goal, whether it is a good idea or not, is to make it less expensive to get a mortgage. The idea is to lower debt costs to bring possible home-buyers or investors with credit to stabilize the market.
Investors have always had the role of stabilizing property values after every bust and this cycle is no different. When investors and retail buyers begin to buy up property, values will start to recover which helps the banks' balance sheets. The good news for loan officers is that the cycle so far has been pretty predictable and we have long been anticipating a new refinance boom that usually comes after federal manipulation.
The Real Estate Markets
If housing permits continue to slow, it may be some time before the real estate market improves in the US. Keen an eye on a few things in Houston however. Some cities (including Houston) are still countering the global economic trend. However, even in Houston, permits are starting to slow which may lead to a retraction as we move into next year.
However, layoffs will be the big indicator leading into 2009. If we experience substantial job layoffs then the already fragile housing market could experience a deeper setback.
Investment Opportunities
The credit crisis has brought fear into markets whose economic fundamentals would not otherwise justify it. Therefore there may never be a better time to buy single family homes in Houston because the emotional fear does not match the fundamentals and prices have fallen below what they would otherwise warrant without the short-term, emotionally-driven fear.
In addition, with lending standards still remaining tight, many buyers are unable to credit-qualify to purchase a single family home. This is creating, and will continue to create, a great opportunity for savvy investors to pick up investment properties at undervalued prices. - 15224
Mortgage Markets and Credit
At the end 2008, probably the biggest news is the determination of the Treasury and the Fed to try to push mortgage rate lower. Six hundred billion dollars of Fannie and Freddie mortgage-backed securities and unsecured debt are to be purchased by the Fed according to their November 25th announcement.
The goal, whether it is a good idea or not, is to make it less expensive to get a mortgage. The idea is to lower debt costs to bring possible home-buyers or investors with credit to stabilize the market.
Investors have always had the role of stabilizing property values after every bust and this cycle is no different. When investors and retail buyers begin to buy up property, values will start to recover which helps the banks' balance sheets. The good news for loan officers is that the cycle so far has been pretty predictable and we have long been anticipating a new refinance boom that usually comes after federal manipulation.
The Real Estate Markets
If housing permits continue to slow, it may be some time before the real estate market improves in the US. Keen an eye on a few things in Houston however. Some cities (including Houston) are still countering the global economic trend. However, even in Houston, permits are starting to slow which may lead to a retraction as we move into next year.
However, layoffs will be the big indicator leading into 2009. If we experience substantial job layoffs then the already fragile housing market could experience a deeper setback.
Investment Opportunities
The credit crisis has brought fear into markets whose economic fundamentals would not otherwise justify it. Therefore there may never be a better time to buy single family homes in Houston because the emotional fear does not match the fundamentals and prices have fallen below what they would otherwise warrant without the short-term, emotionally-driven fear.
In addition, with lending standards still remaining tight, many buyers are unable to credit-qualify to purchase a single family home. This is creating, and will continue to create, a great opportunity for savvy investors to pick up investment properties at undervalued prices. - 15224
About the Author:
Home Buddies is a Houston credit repair coach for business and investors in real estate. Home Buddies coaches clients through the process of restoring credit and helps them overcome obstacles to financing properties and growing their portfolio.
