Home Buddies Economic Outlook 3 - Credit and Investor Opportunity
The past few weeks we have looked at an overview of the U.S. economy as a whole. Now we will look at what is likely to unfold in the mortgage and real estate markets next year. Then I will go over some opportunities that come up in this stage of the real estate cycle.
Credit Markets & Lending
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 Market
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.
However, layoffs will be the big indicator leading into 2009. If we experience substantial job layoffs then the already fragile housing market could experience a deeper setback.
Opportunities for Investors
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.
In addition, with lending standards still remaining tight, many buyers are unable to credit-qualify to purchase a single family home. This is creating, and will continue to create, a great opportunity for savvy investors to pick up investment properties at undervalued prices.
Credit Markets & Lending
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 Market
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.
However, layoffs will be the big indicator leading into 2009. If we experience substantial job layoffs then the already fragile housing market could experience a deeper setback.
Opportunities for Investors
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.
In addition, with lending standards still remaining tight, many buyers are unable to credit-qualify to purchase a single family home. This is creating, and will continue to create, a great opportunity for savvy investors to pick up investment properties at undervalued prices.
About the Author:
Home Buddies is a Houston Credit Repair Coach for business and investors in real estate. Home Buddies coaches clients through the process of restoring credit and builds a custom Business Development Strategy to overcome the obstacles to financing properties and growing a portfolio.
posted by Credit Counseling at
10:37 AM
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