The AP would love to cry wolf and say that because new home starts are down, that we are headed for another catastrophic downturn. I am not saying this is a certain untruth, but it is not necessarily accurate. Every fall the housing starts go down and as any real estate professional can tell you, from Halloween to New Years is almost a mandatory vacation.
The federal government has established the first home buyer tax credit program to increase the rate of home purchases and attempt to bring stability to the housing market. Since the tax credit was extended and expanded to allow investors to use it, we can expect next year to better this years seven percent appreciation rate.
With the federal lending corporations Fanny Mae and Freddy Mac reclassifying much of the nation as "appreciating" markets this fall, new lending avenues will open up to home buyers. What this does it allows Primary Mortgage Insurance for lenders, so they will now lend up to one hundred percent loan to value financing again. Prior to this change they were only lending at ninety percent loan to value meaning that buyers would have to come up with ten percent from their own sources.
Many people wonder if it wasn't the one hundred percent financing ideas that lead us into the mess we are in now, and they are right. The fact is that this exact type of financing is risky but it also does stimulate the real estate market by increasing the number of eligible buyers, which is what it was intended to do. The real estate market would be far more stable with people saving up the 20% down payment but the actions needed to stabilize the market in the short term required more drastic actions.
Without a return to responsible saving practices with the average citizen the national housing market will continue to suffer from these periods of volatility. With the last round of tax credits expect to see housing starts back up this spring and the possibility of another high single digit period of appreciation as the recovery is on the way, as slow as the journey may be.
Until then, we will simply hope that the housing market stabilizes and more people can find work in the construction industry from it. - 31821
The federal government has established the first home buyer tax credit program to increase the rate of home purchases and attempt to bring stability to the housing market. Since the tax credit was extended and expanded to allow investors to use it, we can expect next year to better this years seven percent appreciation rate.
With the federal lending corporations Fanny Mae and Freddy Mac reclassifying much of the nation as "appreciating" markets this fall, new lending avenues will open up to home buyers. What this does it allows Primary Mortgage Insurance for lenders, so they will now lend up to one hundred percent loan to value financing again. Prior to this change they were only lending at ninety percent loan to value meaning that buyers would have to come up with ten percent from their own sources.
Many people wonder if it wasn't the one hundred percent financing ideas that lead us into the mess we are in now, and they are right. The fact is that this exact type of financing is risky but it also does stimulate the real estate market by increasing the number of eligible buyers, which is what it was intended to do. The real estate market would be far more stable with people saving up the 20% down payment but the actions needed to stabilize the market in the short term required more drastic actions.
Without a return to responsible saving practices with the average citizen the national housing market will continue to suffer from these periods of volatility. With the last round of tax credits expect to see housing starts back up this spring and the possibility of another high single digit period of appreciation as the recovery is on the way, as slow as the journey may be.
Until then, we will simply hope that the housing market stabilizes and more people can find work in the construction industry from it. - 31821
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