Are you like me? Do you get tired of trying to read through all the media hoopla to figure out the real bottom line? Does it feel like deciphering code? I'm not dumb, just lazy sometimes I guess. I'd like to read about things like the Fannie Mae/Freddie Mac takeover in terms that are simple to understand and find out quickly what all this means to me.
Bill Stanley, who was my real estate Broker for many years, has a knack for deciphering this code and putting things into words I can understand quickly and easily. I emailed Bill and asked him to explain this FM/FM information to me so that I could explain it to those of you like me who don't have the time or inclination to pour over all the details provided by the media.
This is his reply...Thanks Bill! You'll Always Be The Best!
I believe the "jury is still out" on this one actually. I think for the short term this will free up capital for purchasers and will lower the interest rate for a short period of time, but I do believe they will rise over the long term. The importance of this move cannot be overstated. Failure of either Freddie Mac or Fannie May would have been an unthinkable disaster for the financial industry and would have stopped most if not all of the lending for homes, Shifting the burden to the citizens of the US for the failure of independent institutions is questionable at best.
The resulting freeing of money for home loans will be a real positive, but look for the criteria for those loans to be stringent and expensive. Since FHA will be the only lender that will be viable for most loans, they will restrict the appraisals and charge higher fees. This will result in a financially stable buyer being able to once again purchase homes, but it will only make a small dent in the glutted number of homes on the market through foreclosure etc. Until this backlog is brought to a more reasonable level, expect a continuation of declining prices at least through the middle of next year. Also, keep in mind that the prices for most of these foreclosed properties is at or below the loan amount, so competing properties will continue to sell very slowly since the difference in pricing could be substantial.
As always, a home "priced right & in good condition" will sell in time, but the key is what price is "right". Generally, comparable sales over 3 to 4 months old are useless to establish a "right" price and even that continues to be a moving target. It promises to be a long cold winter for the real estate industry and sellers, so if one has an option of selling now or 2 to 5 years down the road, that will be the better choice.
Most importantly, there will be loan money available to buyers because of this government move, but the demand for housing will continue to be stagnant for some time. This is the best time to buy I have ever seen, but it may even get better. Perhaps that will move some potential buyers "off the fence" and make their move from renting, but those numbers will continue to be minimal at best.
( I liked the LAST PART the BEST! And Minimal is better than Non-Existent! )