Everything in life seeks equilibrium and balance. It doesn’t matter what it is... everything seeks balance. If you work too hard you will get sick and you will be forced to rest. If you don’t eat you get hungry. When the government manipulates affordability in housing markets it throws off the true market equilibrium. Fundamentally the government was attempting to create a new equilibrium where are greater percentage of the population were home owners. We now know that though well intentioned this push had severe consequences.
I have written a fair amount on this subject before. However the attached article is a compelling reminder that false supports are preventing us from finding the equilibrium. Letting the market correct will bring real stability back into the market. Yes, prices will likely be lower but the footing will be firm. False supports will continue to promote indecision in the marketplace and the reality is that the market is seeking a true equilibrium in spite of these false supports... hence the drop in sales numbers.
See the URL below:
http://money.cnn.com/2010/08/31/real_estate/federal_housing_programs.fortune/index.htm?section=money_realestate&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_realestate+%28Real+Estate%29
Desk of Zach Trailer
By Lanny Berg
Showing posts with label mortgage. Show all posts
Showing posts with label mortgage. Show all posts
Tuesday, August 31, 2010
Tuesday, June 1, 2010
Median Prices are Rising
The headline from the article link below states "Median Price Rises in nearly 60 percent of US metropolitan areas in first quarter".
This is an exuberant headline that would lead one to believe that the macro real estate market is out of the woods and on the road to recovery. We all hope this is the case but we will only have an idea as to the true health of the national market after we have 3-4 quarters with successive gains without the Government's underlying support mechanisms in place. First time home buyers have accounted for a huge percentage of transactions spurred on by huge incentives. Also, the mortgage market has benefited from a plummeting Euro in the last month.
There are some good signs in the market but I think it is a bit early to say that the broad market is out of the woods and that we are in full recovery mode. So, how do you know whether to buy or not? It needs to make sense... what does that mean? It means that you're criteria alone will determine if it is a good time to buy. The reality is that now is a much better time to buy than 4 years ago if you are gainfully employed. Generally, your dollar goes a lot farther now than it did then...
http://www.fox59.com/business/sns-ap-us-home-stretch,0,1815580.story
From the desk of Zach Trailer
This is an exuberant headline that would lead one to believe that the macro real estate market is out of the woods and on the road to recovery. We all hope this is the case but we will only have an idea as to the true health of the national market after we have 3-4 quarters with successive gains without the Government's underlying support mechanisms in place. First time home buyers have accounted for a huge percentage of transactions spurred on by huge incentives. Also, the mortgage market has benefited from a plummeting Euro in the last month.
There are some good signs in the market but I think it is a bit early to say that the broad market is out of the woods and that we are in full recovery mode. So, how do you know whether to buy or not? It needs to make sense... what does that mean? It means that you're criteria alone will determine if it is a good time to buy. The reality is that now is a much better time to buy than 4 years ago if you are gainfully employed. Generally, your dollar goes a lot farther now than it did then...
http://www.fox59.com/business/sns-ap-us-home-stretch,0,1815580.story
From the desk of Zach Trailer
Monday, May 24, 2010
DO AS I SAY... NOT AS I DO
DO AS I SAY... NOT AS I DO
There are many things about real estate that are great... one of which is that it never gets dull. With the boom everyone was a genius. With the bust everyone is pointing fingers at who's fault it was. Though banks had a big role in feeding the bubble it was Government policy or lack there of that created the ingredients for the bubble to form. Government policy encouraged home ownership to those who couldn't afford it and Wall Street in their creative capacity figured out how to create the financial products that would keep the supply of investment money coming in to fund the loans.
Government is now attempting to throw a lifeline to struggling homeowners and "rescue" them by creating programs and policies encouraging banks to offer loan modifications programs to struggling homeowners.... except for government held mortgages of course. An interesting read from the link to the article below.
http://money.cnn.com/2010/05/14/news/economy/fannie_freddie_principal_reduction/index.htm?section=money_realestate&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_realestate+%28Real+Estate%29
From the desk of Zach Trailer
There are many things about real estate that are great... one of which is that it never gets dull. With the boom everyone was a genius. With the bust everyone is pointing fingers at who's fault it was. Though banks had a big role in feeding the bubble it was Government policy or lack there of that created the ingredients for the bubble to form. Government policy encouraged home ownership to those who couldn't afford it and Wall Street in their creative capacity figured out how to create the financial products that would keep the supply of investment money coming in to fund the loans.
Government is now attempting to throw a lifeline to struggling homeowners and "rescue" them by creating programs and policies encouraging banks to offer loan modifications programs to struggling homeowners.... except for government held mortgages of course. An interesting read from the link to the article below.
http://money.cnn.com/2010/05/14/news/economy/fannie_freddie_principal_reduction/index.htm?section=money_realestate&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_realestate+%28Real+Estate%29
From the desk of Zach Trailer
Monday, May 10, 2010
A Wild Ride on Wall Street
What a wild ride on Wall Street last week. All of 2010 gains were temporarily wiped out and after a roller coaster couple of days the Dow is gaining back what was lost. At one point a 30 year mortgage was in the neighborhood of 4.5% as money fleeing from EU risk came pouring into US Treasuries. An EU bailout has caused the dollar to fall again today 5/10 which is good for the stock market.
The Real Estate market continues to show strength. Below is a great link to see just how strongly the housing market has come back in silicon valley. http://www.burbed.com/2010/04/25/silicon-valley-median-home-price-rises-29-percent/ Median prices have risen by 29%. Likely there are a few contributing factors. The expiration of the first time home buyers tax credit brought a lot of buyers into the market. Historically low interests rates continue to be a big incentive to buyers. The truth of the matter is that compared with a year ago those who are still employed are far less afraid of losing their jobs than they were a year ago, especially in here in Silicon Valley. In Silicon Valley companies are financially healthy and making a lot of money. Many including Apple have announced fabulous earnings which gives confidence to those who are employed. In fact, tech is hiring again which will only continue to build strength in the market.
Have a great Monday!
From the desk of Zach Trailer.
The Real Estate market continues to show strength. Below is a great link to see just how strongly the housing market has come back in silicon valley. http://www.burbed.com/2010/04/25/silicon-valley-median-home-price-rises-29-percent/ Median prices have risen by 29%. Likely there are a few contributing factors. The expiration of the first time home buyers tax credit brought a lot of buyers into the market. Historically low interests rates continue to be a big incentive to buyers. The truth of the matter is that compared with a year ago those who are still employed are far less afraid of losing their jobs than they were a year ago, especially in here in Silicon Valley. In Silicon Valley companies are financially healthy and making a lot of money. Many including Apple have announced fabulous earnings which gives confidence to those who are employed. In fact, tech is hiring again which will only continue to build strength in the market.
Have a great Monday!
From the desk of Zach Trailer.
Tuesday, April 6, 2010
Mortgage Market off of Life Support
The Federal Government has officially stopped buying mortgage backed securities as of March 31st 2010. This government action is credited with keeping the broader housing market alive over the last year by keeping liquidity in the market and continuing to fund first time home-buyer mortgages. These purchases, stimulated by additional tax credits have accounted for up to 50% of purchases in many markets across the country and have provided key support to the broader housing market. Interest rates should be watched closely as the financial markets will determine demand for these securities and thus affect mortgage interest rates. The good news is that prices have not jumped nearly as much as people initially thought they might. Optimistically speaking... this will be a smooth transition.
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