Home Buddies Quarterly Economic Report - Part 3 - Opportunities
We studied the macroeconomic factors effecting the US in first two parts of the Quarterly Economic Report. This week, we will look into the future and give an outlook on the real estate and mortgage markets of 2009. Last, we are going to propose some opportunities that every investor should recognize in this stage of the surprisingly predictable real estate cycle.
Credit and Financial Markets
Perhaps the greatest news leading into 2009 is the commitment by the Department of the Treasury and the Federal Reserve ("The Fed") to achieve lower mortgage interest rates. The fed announced on November 25th that it would purchase $600 billion in Fannie Mae and Freddie Mac mortgage-backed securities and unsecured debt.
Whether the government will be able to accomplish it or not, the idea is to lower the cost and improve the investment of financing a property. The goal is to decrease debt costs to put potential investors or retail buyers with good credit back in the market to stabilize the economy.
Investors have always had the role of stabilizing property values after every bust and this cycle is no different. When investors and retail buyers begin to buy up property, values will start to recover which helps the banks' balance sheets. The good news for loan officers is that the cycle so far has been pretty predictable and we have long been anticipating a new refinance boom that usually comes after federal manipulation.
The Real Estate Markets
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.
If unemployment figures creep up in Houston next year then that may be a sign that Houston may not escape the US and global economic turmoil with just a small hiccup.
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 and Financial Markets
Perhaps the greatest news leading into 2009 is the commitment by the Department of the Treasury and the Federal Reserve ("The Fed") to achieve lower mortgage interest rates. The fed announced on November 25th that it would purchase $600 billion in Fannie Mae and Freddie Mac mortgage-backed securities and unsecured debt.
Whether the government will be able to accomplish it or not, the idea is to lower the cost and improve the investment of financing a property. The goal is to decrease debt costs to put potential investors or retail buyers with good credit back in the market to stabilize the economy.
Investors have always had the role of stabilizing property values after every bust and this cycle is no different. When investors and retail buyers begin to buy up property, values will start to recover which helps the banks' balance sheets. The good news for loan officers is that the cycle so far has been pretty predictable and we have long been anticipating a new refinance boom that usually comes after federal manipulation.
The Real Estate Markets
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.
If unemployment figures creep up in Houston next year then that may be a sign that Houston may not escape the US and global economic turmoil with just a small hiccup.
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 helps them overcome obstacles to financing properties and growing their portfolio.
posted by Credit Counseling at
10:39 AM
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