What Will It Take For the Housing Market To Bounce Back?

We've heard so much media drama about the housing and mortgage crisis for the last year or so, but does any of it make sense? Even those of us in the business can find the information overwhelming and confusing. An article I read in Tierra Grand, a journal published by the Real Estate Center at Texas A&M University, really helped put things in perspective for me.

"After the Fallout," written by Dr. Mark Dotzour, explains how "the "no-risk" environment of the past few years spurred lenders to make risky loans and investors to buy those loans," many of which were actually high risk loans disguised as good investments in the then flourishing market. Suddenly lenders were able to lift many of the restrictions of the past and offer 100% loans to individuals who really couldn't afford them. Investors from all over the world were purchasing these loans because the strong market made them good investments. When the market began to shift in 2006 and prices started to decline, the risk free environment began to shift as well. Suddenly investors stopped investing in mortgages and a little snowball began to roll and grow.

So is there light at the end of the tunnel? Dotzour believes the solution to this problem is twofold...first, the price of homes must stop falling, and second, investor confidence in the traditional mortgage must be restored. Dotzour points out that in the first problem, "an overwhelming imbalance of supply and demand caused prices to fall...[they] will stop falling when the excess supply is eliminated from each local market." The second problem is a bit more difficult since it more closely tied to the health of the economy, but Dotzour seems confident that the outlook for Texas markets remains strong due to a relatively strong economy and projected population and job growth.

The overall feeling I got from this article was a positive one...though we may not be completely out of the woods yet, many signs indicate a positive shift. It is important to note too, that much of the negative national news we hear about the housing crisis has not really impacted us as strongly here in Bryan/College Station...our market has remained relatively healthy.

Yes, it is still a good time to buy and sell real estate here in the Brazos Valley. Find out today what your home is worth, or what properties are available in our local market. Let my market expertise go to work for you...contact me today at:

979-220-6744

kurtg@century21bcs.com

www.kurtgrafe.com

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