Home Buddies Quarterly Economic Report - Part 3 - Opportunities
The past few weeks we have looked at an overview of the U.S. economy as a whole. Now we will look at what is likely to unfold in the mortgage and real estate markets next year. Then I will go over some opportunities that come up in this stage of the real estate cycle.
Mortgage Markets and Credit
It seems the biggest story coming out of 2008 is the Fed's announcement in November to buy up $600 billion in unsecured debt and mortgage-backed securities from Fannie and Freddie. The push is an attempt by the Federal Reserve and the Treasury to steer toward lower mortgage rates - not just lower short-term rates.
The sole reason the Fed did this was to lower debt cost (i.e. make it cheaper to obtain a mortgage). They are attempting to kill two birds with one stone by making mortgages cheaper in hopes of enticing potential single family home buyers with credit to come off of the sidelines and purchase.
If investors and retail buyers come back into the market, property values will begin to stabilize thereby improving the balance sheets in the banking industry. This has always been the role of investors in the real estate cycle. This is also a plus for the mortgage loan officers and brokers because the credit markets will ultimately loosen and in 2009 the mortgage market should swing back up. The cycle to this point has been fairly predictable and we have long been predicting the next refinance boom following government intervention.
The Real Estate Market
Here are a few things to look into for Houston. Markets like Houston have been running against the national economic trend, but even in Houston permits are starting to slow. If there is a continued slow-down in housing permits, we may be in it for the long haul.
If unemployment figures creep up in Houston next year then that may be a sign that Houston may not escape the US and global economic turmoil with just a small hiccup.
Opportunities for Investors
Fear in markets leads to an over-correction and there may never be a better time to buy property in Houston - if you have good credit. In otherwise stable markets like Houston, fear is causing prices to move below what Houston's economic indicators should warrant.
Lastly, with the current credit standards, many buyers (including many investors) are no longer able to get financing for single family homes. Now there is an opportunity for investors with good credit (or those with other financing options) to buy investment real estate at below-market prices.
Mortgage Markets and Credit
It seems the biggest story coming out of 2008 is the Fed's announcement in November to buy up $600 billion in unsecured debt and mortgage-backed securities from Fannie and Freddie. The push is an attempt by the Federal Reserve and the Treasury to steer toward lower mortgage rates - not just lower short-term rates.
The sole reason the Fed did this was to lower debt cost (i.e. make it cheaper to obtain a mortgage). They are attempting to kill two birds with one stone by making mortgages cheaper in hopes of enticing potential single family home buyers with credit to come off of the sidelines and purchase.
If investors and retail buyers come back into the market, property values will begin to stabilize thereby improving the balance sheets in the banking industry. This has always been the role of investors in the real estate cycle. This is also a plus for the mortgage loan officers and brokers because the credit markets will ultimately loosen and in 2009 the mortgage market should swing back up. The cycle to this point has been fairly predictable and we have long been predicting the next refinance boom following government intervention.
The Real Estate Market
Here are a few things to look into for Houston. Markets like Houston have been running against the national economic trend, but even in Houston permits are starting to slow. If there is a continued slow-down in housing permits, we may be in it for the long haul.
If unemployment figures creep up in Houston next year then that may be a sign that Houston may not escape the US and global economic turmoil with just a small hiccup.
Opportunities for Investors
Fear in markets leads to an over-correction and there may never be a better time to buy property in Houston - if you have good credit. In otherwise stable markets like Houston, fear is causing prices to move below what Houston's economic indicators should warrant.
Lastly, with the current credit standards, many buyers (including many investors) are no longer able to get financing for single family homes. Now there is an opportunity for investors with good credit (or those with other financing options) to buy investment real estate at below-market prices.
About the Author:
Home Buddies is a Houston credit repair coach for business and investors in real estate. Home Buddies coaches clients through the process of restoring credit and creates a business development strategy to help them overcome obstacles to financing properties and growing their portfolio.
posted by Credit Counseling at
10:31 AM
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