Housing market - what’s it going to take for a turnaround?
March 20, 2009 | Uncategorized | 
No comments
Given the state of the economy people have been asking me when I think we will see the bottom of the housing market. Considering nobody has a crystal ball that can predict the future I would like to discuss a few ideas that could help speed our recovery.
First thing that has to be done is to stem the tide of new foreclosures. This is being addressed by the current administrations recovery plan which includes enabling those who can afford to refinance the ability to do so even if their loan-value ratios are not what standard Fannie-Mae guidelines require. Additionally, the recovery plan includes loan modifications for those who are facing foreclosure. This provides lenders with the ability to lower interest rates to a point that these homeowners can afford to keep their home.
Other things that can be done that are currently not in the plans are:
1) Provide a tax credit for anyone who purchases a bank owned home.
2) Open guidelines for investors to obtain financing to purchase and fix these homes. Most bank owned homes are the sore spot of the neighborhood and drive the entire market down. They usually require money to ready them for rent or resale. If lending guidelines were expanded to provide borrowers with funding to purchase and fix these homes it would help speed the housing recovery.
3) Provide a 2 year window for investors to buy and sell these properties with a tax exempt status. Eliminating capital gains also would help an investor in making his purchase decision.
These are some of the ideas discussed by commentator John Adams and I totally agree. If we just wait for the general market to hit bottom it will be a very slow recovery. There are so many of these bank owned homes that it will be quite some time before many neighborhoods recover.
For those that are not in trouble I suggest paying off as much debt as possible. There was never a time for wasteful spending but now more than ever is a time to focus our efforts on minimizing our own risk by accelerating our debt repayment. Your mortgage is a great place to start. For more information check out a prior article on mortgage acceleration.
Popularity: 2% [?]
