I just read two articles this morning that grabbed my attention. One has to do with the expectation of home prices and the other with the idea of a minimum downpayment plan.
The good, is that the poll suggests that home prices are "bottoming out" and should remain stable for the next several years:
"More than half of economists, real estate experts and investment strategists polled by MacroMarkets LLC in June said they now expect national home prices to hit a bottom sometime in 2011 and remain stable through 2015"
The bad, is the article that talks about the proposed Dodd-Frank law advocating minimum 10 to 20 percent downpayments and rules that will subject buyers with minimum downpayments to much higher interest rates:
"The down payment proposal comes as part of new rules for mortgage lenders in the Dodd-Frank law. Federal agencies are trying to set criteria for what should be considered a reasonably safe mortgage or QRM. Lenders issuing a QRM will be able to sell the loan to an investor and avoid retaining any of the risk. However, lenders will consider non-QRMs more risky since they'll have to retain a 5 percent ownership. (Loans insured by the Federal Housing Agency would be exempt.) For borrowers who are unable to meet QRM, they would have to pay more for their loans because lenders would have to boost interest rates on their loans to cover the extra costs."
The latter sounds a lot like the back asswards thinking of the credit card companies. If you're a higher risk, we'll protect ourselves by charging you more to borrow the money. Talk about a self-fulfilling prophecy of doom.
I am a staunch advocate of "positivism" and believe that we need more of it in this market. While I don't think that the information on home prices will necessarily get buyers off of the fence (since it basicallt says that prices won't be escalating any time soon), it does give a nedge to those buyers waiting for things to "bottom out". The Dodd-Frank law sounds like a giant leap backwards at a time when we can ill afford it. Granted, I haven't read the law from cover to cover yet, but I have a really bad feeling about it. A decision will be rendered within the next month. Let's cross our fingers!
For now, stay positive and find the good news and spread it. While the glass might be half empty, it's also half full! It's all a matter of how you choose to view it.
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