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Thursday, December 25, 2008
Over the past several weeks we have taken a bird's eye view of the US economy. In this post I will be addressing what we will likely see happening in mortgage and real estate markets in 2009. Finally, I will point out the unique opportunities that are available in this type of environment.
Credit and Financial Markets
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 goal, whether it is a good idea or not, is to make it less expensive to get a mortgage. The idea is to lower debt costs to bring possible home-buyers or investors with credit to stabilize the market.
Furthermore, if home buyers jump into the real estate market, this will further stabilize home values which will help the banks' balance sheets. All of this bodes well for mortgage brokers and loan officers because the ultimate goal of the government is to get mortgage lenders to loosen credit and they have committed to do it. At some point during 2009 mortgage lending should begin to pick up. Expect a refinance boom when the mess clears up.
The Real Estate Markets
If housing permits continue to slow, it may be some time before the real estate market improves in the US. Keen an eye on a few things in Houston however. Some cities (including Houston) are still countering the global economic trend. However, even in Houston, permits are starting to slow which may lead to a retraction as we move into next year.
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
The credit crisis has brought fear into markets whose economic fundamentals would not otherwise justify it. Therefore there may never be a better time to buy single family homes in Houston because the emotional fear does not match the fundamentals and prices have fallen below what they would otherwise warrant without the short-term, emotionally-driven fear.
With credit standards like they are right now, many investors (and most retail buyers) are out of the game because they are not able to get financing for single family homes. So now is a window of opportunity for smart investors with good credit to buy up undervalued investment properies in Houston.
Credit and Financial Markets
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 goal, whether it is a good idea or not, is to make it less expensive to get a mortgage. The idea is to lower debt costs to bring possible home-buyers or investors with credit to stabilize the market.
Furthermore, if home buyers jump into the real estate market, this will further stabilize home values which will help the banks' balance sheets. All of this bodes well for mortgage brokers and loan officers because the ultimate goal of the government is to get mortgage lenders to loosen credit and they have committed to do it. At some point during 2009 mortgage lending should begin to pick up. Expect a refinance boom when the mess clears up.
The Real Estate Markets
If housing permits continue to slow, it may be some time before the real estate market improves in the US. Keen an eye on a few things in Houston however. Some cities (including Houston) are still countering the global economic trend. However, even in Houston, permits are starting to slow which may lead to a retraction as we move into next year.
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
The credit crisis has brought fear into markets whose economic fundamentals would not otherwise justify it. Therefore there may never be a better time to buy single family homes in Houston because the emotional fear does not match the fundamentals and prices have fallen below what they would otherwise warrant without the short-term, emotionally-driven fear.
With credit standards like they are right now, many investors (and most retail buyers) are out of the game because they are not able to get financing for single family homes. So now is a window of opportunity for smart investors with good credit to buy up undervalued investment properies in Houston.
About the Author:
Home Buddies is a Houston credit repair coach for real estate investors. Home Buddies develops and implements a customized strategy to restore credit and helps them overcome obstacles to financing properties and growing their portfolio.
posted by Credit Counseling at
10:31 AM
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