If banks would simply return to normal, sound underwriting standards and begin lending to more creditworthy borrowers, we’d get a much faster recovery in the housing sector
My colleague at work received a call from his bank offering to do his re-fi at a lower rate. He hadn't done anything to initiate this, so, as a business person, he was confused about why they would make this offer. Aren't they working just to replace a perfectly good loan with one at a lower rate? How can that make any sense?
The explanation was that all their loans are sold to FannieMae or FreddieMac anyway and they're paid on the fees to service the loan. They'd rather keep servicing his loan for the next 10+ years rather than risk losing him when he does a re-fi with another bank.
In light of this example, isn't money widely availabe from banks, from mortgage brokers, from online mortgage lenders, etc. for anyone who is creditworthy?
Re: More Like a Silverplate Lining
John Jordan
6/30/2011 1:34:30 PM
I agree. A superheated market is what caused many of the problems we have now. However, from what I am hearing from Realtors and others, lenders, who had allowed their reps. to engage in risky or predatory lending during the boom, are now being way too stringent and are delaying or killing transactions that should take place.
There are a host of reasons why residential real estate is struggling. Some of those issues, such as consumer confidence, unemployment, short sales and foreclosures, will have to work themselves out over time. The availability of credit for these transactions could be fixed quickly and would provide a boost to an industry in need of some good news.
It's telling that you set out to write an optimistic article on the housing market and it ends with " Just bulldoze them.". Well, thanks for trying.
I thnk demographics plays a big role. We're at the end of a long housing market boom that was driven by the baby boomers buying and upgrading their homes. For most of us, spending on housing peaks while we're in our 40's. Most all the baby boomers are past that now, and their spending on housing is in a natural decline.
This becomes a big contributor to the problems with the housing market as the boomers looking to downsize out-number younger people entering the market or upsizing. NAR can say whateve they like, it will be some time before the excess supply is put to good use.
Re: More Like a Silverplate Lining
ProfR
6/30/2011 1:15:32 PM
Why isn't where we are now in housing the "new normal". Since I think the housing market overheated before the prices dropped, I think a lot of this was a correction. So if we start from where we are and maybe loosen the credit market a little, why isn't that what should happen?
Silver
AskAsa
6/30/2011 1:11:43 PM
The climb from any abyss begins with one tiny optimistic step.
Many people I know are searching for good buys.
Re: More Like a Silverplate Lining
John Jordan
6/30/2011 12:57:55 PM
Reporters are usually pessimists by nature, so trying to put a sliver lining on this market is a chore. Also, I am one of the countless homeowners under water. I purchased a home in 2007 and have seen my home value fall by about $100,000. But, to be honest I am not moving for years so all this is paper money and I do believe in housing as a long term investment.
I talk to Realtors as part of my business and buyers are taking advantage of the low prices, but a variety of factors, appraisals and tough lending standards, are delaying closings or killing deals entirely.
I firmly believe that until the housing market turns around, and I am talking just returns to normal activity, the national ecomomy will continue to struggle.
More Like a Silverplate Lining
Street Smart
6/30/2011 12:30:08 PM
John, I'm an optimist too, so I really appreciate your efforts at positive thinking here. But, oh man, it's a tough, tough sell...
I live in an area that has been blessedly spared the brunt of major foreclosure action, but things are stagnant here with a capital S. There are houses on the market but absolutely nothing is selling.
I know this from the most scientific of sources: I pass our town's top Realtor on my dog walk each and every morning! Lovely woman but she's not always in a lovely mood...
Though the housing market is still hurting, and by hurting i mean its taking an epic beating still, I still see this as a great time to buy, if its the right time for a buyer. Clearly you would not want to buy if you might be moving in the next few years, but if you are planning on staying in the same genral area for a while there is a very high likelyhood you can get a great deal right now.
Optimism
driven
6/30/2011 11:02:59 AM
Optimism is inevitably the last hope of the defeated.
I'll keep renting.
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