If you are in real estate, plan a vacation for this winter, not now.
Disney and Real Estate
It's a hot, muggy August pre-sunrise morning and thoughts of beaches and hydration are on people's minds.
Sweat, shorts and sodas are soaking their souls and the thoughts of economic recovery, tax credits and mortgage backed-securities are not nearing their frontal lobes.
(OK, here comes the BUT....)
BUT, we are just over 90 days away from the second real estate bubble explosion in the last few years.
Why? The expiration of the $8000 tax credit matched with the Gestapo like mortgage guidelines, high interest rates and the lack of job creation will blow up the temporary real estate blip that we've seen since the spring.
If you a first time eligible buyer for the credit, you must CLOSE and FUND by 11-30-2009 in order to get the credit.
That means, you need to find a house and start your inspections, mortgage, etc ASAP so real estate agents need to do a 24/7 for their clients in order that they make the timing.
If you are a Seller, don't be ridiculous, if you need to come down a couple of thousand in order to sell, do it because if you don't, you may cry in your egg nog this Christmas because once the credit goes away (which was the catalyst for buyers to get off the fences to begin with), the buyers go back to the Dark Side!
Now, a message for our friends in the mortgage world:
YOU ARE TURNING AWAY GOOD MORTGAGE WITH STUPID NEW RULES
Need I say more? The rules are just stupid for conventional programs and the crap they are allowing into the Government agency loans (FHA) are also nuts.
I again call for all the mortgage bureaucracies (Fannie, Freddie, FHA, VA, USDA) belong into one agency, one set of guidelines and reality to set back in.
Also, each loan needs to have a small insurance fund payment and the government just needs to back each loan, post-insurance so we never have to bail out banks again.
Now onto rates. If you want to stimulate an economy, the basics are that we lower interest rates and we've done that with the Fed lowering the rates to the banks (Fed funds, etc) but what about rates to the public?
Mortgage rates should be very, very low and there should be very easy rate reduction refinances with NO appraisals for people that have the income and good credit.
Most of their loans are already securitized by Fannie and Freddie, so why not let them take a trip to Banana Republic or a trip to Disneyworld to help get the country going so we can add real jobs.
To summarize, if you are a Buyer that can qualify for the credit, get an agreement as soon as possible because Sellers may raise prices in the early part of September to capitalize on the end-of-the-credit people looking to get their share.
If you don't qualify for the credit, wait until the week before Thanksgiving to start looking.
The buyers will have been sucked out like a vacuum cleaner on high and the winter will start coming in.
Sellers might get into a realistic mood and sell at a lower price.
The other idea is to wait until January or February when they may be suffering more and not have the idea that spring is around the corner.
So real estate people, it's hard work followed by Disneyworld!
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