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.
Mortgage Markets and Credit
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 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.
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.
Real Estate Markets
There are a few things to keep an eye on in Houston. If housing permits continue to contract, it could be a while before the national residential real estate scene improves. Several markets such as Houston are still bucking the national trend, but, even in these markets, permits are beginning to contract which is pointing toward a slow-down as we head into 2009.
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
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.
Lastly, with the current credit standards, many buyers (including many investors) are no longer able to get financing for single family homes. Now there is an opportunity for investors with good credit (or those with other financing options) to buy investment real estate at below-market prices.
Mortgage Markets and Credit
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 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.
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.
Real Estate Markets
There are a few things to keep an eye on in Houston. If housing permits continue to contract, it could be a while before the national residential real estate scene improves. Several markets such as Houston are still bucking the national trend, but, even in these markets, permits are beginning to contract which is pointing toward a slow-down as we head into 2009.
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
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.
Lastly, with the current credit standards, many buyers (including many investors) are no longer able to get financing for single family homes. Now there is an opportunity for investors with good credit (or those with other financing options) to buy investment real estate at below-market 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.
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