Home Buddies Economic Outlook 3 - Credit and Investor Opportunity
Over the past several weeks we have taken a bird's eye view of the US economy. In this post I will be addressing what we will likely see happening in mortgage and real estate markets in 2009. Finally, I will point out the unique opportunities that are available in this type of environment.
Credit Markets & Lending
At the end 2008, probably the biggest news is the determination of the Treasury and the Fed to try to push mortgage rate lower. Six hundred billion dollars of Fannie and Freddie mortgage-backed securities and unsecured debt are to be purchased by the Fed according to their November 25th announcement.
The sole reason the Fed did this was to lower debt cost (i.e. make it cheaper to obtain a mortgage). They are attempting to kill two birds with one stone by making mortgages cheaper in hopes of enticing potential single family home buyers with credit to come off of the sidelines and purchase.
If investors and retail buyers come back into the market, property values will begin to stabilize thereby improving the balance sheets in the banking industry. This has always been the role of investors in the real estate cycle. This is also a plus for the mortgage loan officers and brokers because the credit markets will ultimately loosen and in 2009 the mortgage market should swing back up. The cycle to this point has been fairly predictable and we have long been predicting the next refinance boom following government intervention.
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
With all the "fear" that is surrounding the mortgage and real estate markets, there has never been a better time to buy single family residential homes. Consumer concern over the financial crisis is causing real estate prices in stable markets, such as Houston, to fall under what the market fundamentals in Houston would otherwise warrant.
With credit standards like they are right now, many investors (and most retail buyers) are out of the game because they are not able to get financing for single family homes. So now is a window of opportunity for smart investors with good credit to buy up undervalued investment properies in Houston.
Credit Markets & Lending
At the end 2008, probably the biggest news is the determination of the Treasury and the Fed to try to push mortgage rate lower. Six hundred billion dollars of Fannie and Freddie mortgage-backed securities and unsecured debt are to be purchased by the Fed according to their November 25th announcement.
The sole reason the Fed did this was to lower debt cost (i.e. make it cheaper to obtain a mortgage). They are attempting to kill two birds with one stone by making mortgages cheaper in hopes of enticing potential single family home buyers with credit to come off of the sidelines and purchase.
If investors and retail buyers come back into the market, property values will begin to stabilize thereby improving the balance sheets in the banking industry. This has always been the role of investors in the real estate cycle. This is also a plus for the mortgage loan officers and brokers because the credit markets will ultimately loosen and in 2009 the mortgage market should swing back up. The cycle to this point has been fairly predictable and we have long been predicting the next refinance boom following government intervention.
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
With all the "fear" that is surrounding the mortgage and real estate markets, there has never been a better time to buy single family residential homes. Consumer concern over the financial crisis is causing real estate prices in stable markets, such as Houston, to fall under what the market fundamentals in Houston would otherwise warrant.
With credit standards like they are right now, many investors (and most retail buyers) are out of the game because they are not able to get financing for single family homes. So now is a window of opportunity for smart investors with good credit to buy up undervalued investment properies in Houston.
About the Author:
Home Buddies is a Houston credit repair coach for real estate investors. Home Buddies develops and implements a customized strategy to restore credit and creates a business development strategy to help them overcome obstacles to financing properties and growing their portfolio.
posted by Credit Counseling at
1:54 AM
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