CALLING ALL CASH BUYERS!
This is an accurate post. The housing market is stuggling despite unprecendented government market propping. Imagine how bad the housing market really is. When interest rates return to historic norms, the government stops buying, insuring or guaranteeing 95% of all the mortgage loans and loan underwriting gets tougher (as the FHA surely will), the housing market will surely decline further. Add to that markets that have benefited from absurd government spending and ill-advised bank bailouts (think Washington DC and NYC) and even the suposed "bright spots" will suffer. This decline doesn't even need the unemployment situation to get worse even though it surely will. When it is all said and done we will realize that the housing market decline was only 50% to 80% (actual % depends on the local market) done in 2011.
As the mortgage rates continue to drop it inspired me to write about it. Yesterday it was announced that @ 4.17% this is the lowest mortgage rates have been since 1971 when they started keeping records. My reaction to this was great! Then I reminded myself that for the past year every time they notched downward I shouted GREAT!
The problem is is that most of the first time buyers can't qualify because of the large down payments or the high credit scores now required or they have already bought last year this time when the big tax credit was being offered.
The current home owners that would like to move up or downsize are stuck with their upside down mortgages and can't get out of them without huge cost to their credit. My quandary is who is going to get these incredible rates? Certainly not the 9.1% (higher in Florida) unemployed or the folks in foreclosure or the short sellers.
As great as these current rates are only the privileged sector will be able to take advantage and benefit from this. I do not believe this will invigorate the depressed home markets. We have seen very little real improvement in the past year when for the most part interest rates have been below 5%.
Until the economy picks up and people are earning real incomes the housing market that helps fuel so much will languish.
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