The simple answer is LOANS and PRICES.
The low-end market has prices at 25% to 50% down from 3 years ago. We are back to around 2002-2003 prices and they are starting to look like bargains. The pendulum effect in market swings often leads to "overshoot" in market corrections. I think we are close to that territory now.
HOWEVER, that would not be important if loans were not available. Loans at this end of the market, and even up to $ 729,000 FHA, are there if you have good credit, and the interest rates are really low. First time buyer incentives are tremendous. Anyone who can buy right now should be doing so. A first time buyer may even end up with net payments after tax relief less than their rent !
The high-end market is tough. Why? 30 year loans over $ 729,000 are expensive and hard to get. So, if you want to buy a house for $ 2 million with a good loan, you need over $ 1.25 million in cash or equity. This is in a market where investors stocks are way down, business profits are down, and many people in this range used stated income loans to buy their present houses....stated income loans are almost impossible to get right now.
There are people in big houses who bought them on adjustable loans, and are now worried that when interest rates rise, they will not be able to pay. Some houses that were "Worth" $ 3 million 3 years ago, are now selling for half that. But who can buy them? That's the issue!
No comments:
Post a Comment