Is it a good time to buy a house? It seems that has been the question posed to me most often since the day I got into the real estate industry. I have a pilot’s license too, and it seems every time there is a plane that crashes (luckily not very often), I receive a phone call asking me what caused the plane to crash.
Hindsight is 20/20, as they say, and as with plane crashes, the cause is not always discovered until…well, after the crash. And so it is with the stock market, mortgage markets, and housing market. Like a plane crash, there are always a series of events that lead up to the crash. So too is the current state of the housing market where a series of events led to the crash of one of the best housing markets we had ever experienced. Pilot error? Arguable! Pilot, air traffic control and the passengers taking the risk and boarding the proverbial housing airplane for what seemed the ride of their life? Likely!
For those of us that got off the plane before it started its descent, congratulations. Hopefully you didn’t trade up for something more expensive that you now can’t afford. For those of us that rode the housing airliner straight down, well, the good news is that you now own a piece of the American dream. The bad news is that there are no oxygen masks to help us breath in the extremely unpressurized and freezing cold air that suddenly surrounds us, or a life jacket under the seat that will help us float in the unlikely event of a water landing.
So what happens next? That’s the question posed to me most often since this market took this turn down. Seems the news is mostly a mixed bag these days. Yesterday I heard that mortgage applications were up nearly 20% from a year ago. In the same breath, however, I heard that very same reporter say that approvals were down nearly 40% from a year ago.
So while we have some good news, which is an increasing number of people want to buy homes, the bad news is that the lenders have tightened their qualifications, making it nearly impossible to get a loan for that home unless you can provide full documentation and upwards of 30% down.
Don’t you wish you had an extra one-hundred thousand dollars in the bank?
What about the economic recovery package? Over $700 billion to jump start our economy and provide much needed aid, in part, to lending institutions and the housing markets in general. In short, it was also reported this week that the actual number to help us out of this financial crisis is more in the neighborhood of $9 trillion! 9 trillion??!! Hey, here’s a thought. With that kind of money, why don’t they forget about bailing out the banks and institutions that got us into this mess in the first place, and give every person in the
People need money, the banks refuse to lend it, and so the government invented the economic stimulus package, which gave between $500 and $800 on average to economically qualified individuals. But why buy a cow when you can have the whole farm…right? Give us the hundred grand, regardless of our economic status, and watch us spend. That’s what the economy needs…right? It doesn’t take an economist to recognize that people are simply holding on to their cash in a ‘wait and see’ mode, while retail, travel, housing, industrial, etc., are all suffering.
I can use a hundred grand right about now. So can a lot of people. I’d be willing to bet it sure would take the bite out of this economic slump.
Is it a good time to buy a house? If I had an extra one-hundred thousand dollars I would jump back into this market head first. So what happens next? I’ll keep dreaming about ‘what if’s’ and continue to hold on to my cash while I ride this thing out.