How Do We Solve the Housing Crisis? A View from the Trenches.

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Real Estate Agent with Donovan Blatt Realty 01267479

The economy, the housing market, the credit crisis, bank problems, they all seem intrinsically connected to the condition of the housing market.

I don't think many people out there would try to convince you that the current housing market is totally healthy (though many places are better than others and many areas have had large increases in sales - but that's fodder for another post).

That said, what if the government actually incentivized the consumer to go out and eagerly buy homes?  What would that do to the economy, the housing market and all the rest?

How do they do that?  Create greater demand with a limited supply - basic economics!

Orange County HousesOrange County HousesOrange County Houses

For instance, what would happen if the Federal Government suddenly announced that instead of throwing more money at the large corporations, it would subsidize the next 100,000 people (or whatever the economic experts say would be sufficient) who bought homes and give them a 30 year fixed loan at 1.0%

This would significantly cut their payment, even when compared to today's low rates, and would free up that extra money to be spent on other things, which I'm told would stimulate the economy.

Think about it.  Would people who have been sitting on the fences trying to decide, decide that now might the time before the limited number of subsidized loans was gone?

What if there was then a second round at say 3.0% for those who didn't react quickly enough?

Would that drive still more people who have not been certain if now is the time because they missed out on the first round?

What do you think would this make any difference?  Would it make you go out and buy a home? What are your thoughts?

 

Click for a free list of Orange County foreclosures or a free list of Orange County short sales or e-mail Me!


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About the author: Christine Donovan is a California Residential Real Estate Broker with experience in assisting clients buy and sell residential real estate.

Are you upside down in your home? Is it worth less than you owe? Are you concerned about making your mortgage payment? Contact me at christine@donovanblatt.com or 714-319-9751 to discuss your options.

Want to buy a home or to list your property for sale in Newport Beach, Costa Mesa, Huntington Beach or Orange County? Contact me at christine@donovanblatt.com or 714-319-9751 to learn about my system which will make your buying and selling experience easier.

Click Orange County homes for sale to view all OC homes for sale.

Disclaimer: All information in this blog is deemed reliable but is subject to change at any time and is not guaranteed to be accurate nor are there any warantees either express or implied.

Copyright © 2009 by Christine Donovan, All Rights Reserved. If I Sell My Home as a Short Sale, Will I Ever be Able to Buy a Home Again?

 

 

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About the author: Christine Donovan is a California Residential Real Estate Broker with experience in assisting clients buy and sell residential real estate.

Are you upside down in your home? Is it worth less than you owe? Are you concerned about making your mortgage payment? For more information see Options to Foreclosures, understanding short sales or contact me at christine@donovanblatt.com to discuss your options.

If you want to buy a home or to list your property for sale, please click Newport Beach homes, Costa Mesa homes, Huntington Beach homes or Orange County homes.  Click the link if you are interested in buying a home at a courthouse auction sale.

Contact me at christine@donovanblatt.com or 714-319-9751 to learn about her system which will make your buying and selling experience easier.

Disclaimer: All information in this blog is deemed reliable but is subject to change at any time and is not guaranteed to be accurate nor are there any warantees either express or implied. This blog is not intended to offer any legal, tax or other advice.

Click Orange County homes for sale to view all OC homes for sale.

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Anonymous
FreedomCM

Hi Christine,

First problem is:  If you need to sell the house, your buyer will have to pay 6-8% interest, so they won't be able to afford the price that you paid (at least in the first 10 years).

Second problem:  $600k house (average SFR in CM) payment would be ~$2k/month @1%, so for 25% DTI, you would need to make ~$100k/yr.  CM median household income in 2006=$61k, so only ~10% of households would still qualify.  less at 3%.

Third problem:  why should someone in Iowa working at a factory for $40k/yr subsidize my mortgage for a $600k house?  I know that the Fed is currently paying a very low rate, but I expect that within a few years, they will have to pay a more historical 5-7% for funds, if not more do to printing a lot of currency.

It was artificially cheap money (IO ARM, optionARM, etc) that got us into this huge mess with overvalued housing that is now reverbrating across our economy.  We need to return to fundamentals (10%-20% dp, 25% DTI/31%TDTI, FICO>680)

Prices just need to continue coming down to 3x-4x income, I'm afraid.  Not many other answers.

 

(I just read that much of the IE is in the 2.5x-3.5x range now!)

 

Jan 31, 2009 01:33 PM #1
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Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

Freedom CM - You make valid points. 

I guess I'm just frustrated at watching money my kids and grand kids will have to pay back going to big corporations without seeming to solve any of the problems, and I was looking for a different way of solving the problem as long as we're going to keep throwing money at it.

 

Jan 31, 2009 02:02 PM #2
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Lara O'Keefe
North Texas Home Finders - McKinney, TX

Christine, I think that you have an excellent suggestion. Maybe write your congressman. It couldn't hurt.

Feb 01, 2009 07:15 AM #3
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