Wednesday, July 23, 2008
Should I Wait?
Dear Sue
I want to buy a house. I have been waiting until the anticipated wave of foreclosures in July and August bring the real estate prices down even more.
It seems like the foreclosure news has been replaced by news of bank failures. The so-called “credit crisis.”
I know that foreclosures bring the prices down but how does the credit crisis affect my buying decision? Should I wait until the banks are more stable?
Anxious and confused
As we all know supply and demand controls price. Higher supply with little demand equals low price. High demand with low supply equals high price.
When one thinks about real estate in terms of supply and demand, the supply is the available housing inventory and the demand is the number of buyers in the market. Up to this point, few have considered that financing is the fuel for the market. Today’s credit crisis is simply a reduction in the money supply. The harder money is to obtain, the more expensive it is going to become.
Just as the high gasoline prices are causing consumers to turn to alternative fuel sources such as electric, hydrogen and bio fuels, homebuyers are going to need to look at alternative and creative sources of financing.
Recently, money suppliers Wachovia and Washington Mutual, have reported multibillion-dollar losses and have discontinued mortgage lending. To put it in perspective, they are in the “big five” in terms of size.
There is also a bill that threatens down payment assistance programs. According to FHA estimates, forty percent of FHA loan volume involves down payment assistance of some kind. The forty percent estimate means that 300,000 working class families will be locked out of home ownership. Communities across America will take the brunt of an estimated $50 billion in lost real estate sales.
I believe that anyone considering a home purchase should do it now before money becomes too expensive. If credit continues to be in short supply the cost to borrow will go up!
Buying while affordable money is available is a matter of good Home $$s and Sense.
I want to buy a house. I have been waiting until the anticipated wave of foreclosures in July and August bring the real estate prices down even more.
It seems like the foreclosure news has been replaced by news of bank failures. The so-called “credit crisis.”
I know that foreclosures bring the prices down but how does the credit crisis affect my buying decision? Should I wait until the banks are more stable?
Anxious and confused
As we all know supply and demand controls price. Higher supply with little demand equals low price. High demand with low supply equals high price.
When one thinks about real estate in terms of supply and demand, the supply is the available housing inventory and the demand is the number of buyers in the market. Up to this point, few have considered that financing is the fuel for the market. Today’s credit crisis is simply a reduction in the money supply. The harder money is to obtain, the more expensive it is going to become.
Just as the high gasoline prices are causing consumers to turn to alternative fuel sources such as electric, hydrogen and bio fuels, homebuyers are going to need to look at alternative and creative sources of financing.
Recently, money suppliers Wachovia and Washington Mutual, have reported multibillion-dollar losses and have discontinued mortgage lending. To put it in perspective, they are in the “big five” in terms of size.
There is also a bill that threatens down payment assistance programs. According to FHA estimates, forty percent of FHA loan volume involves down payment assistance of some kind. The forty percent estimate means that 300,000 working class families will be locked out of home ownership. Communities across America will take the brunt of an estimated $50 billion in lost real estate sales.
I believe that anyone considering a home purchase should do it now before money becomes too expensive. If credit continues to be in short supply the cost to borrow will go up!
Buying while affordable money is available is a matter of good Home $$s and Sense.
# posted by Sue Thompson @ 10:15 AM 
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