Home May Be the Best Place to Invest in 2009
Source:
http://boiserealestateinfo.net
Publish Date: 01/14/2009
As one of the worst years in real estate history finally comes to a close, bargains are abundant, the government is offering unusual mortgage assistance and incentives, and investing in a home may begin to show real promise.
House prices are still dirt cheap, and the number of homes for sale in all price ranges is abundant – perhaps much too abundant. In fact it would take about a year to sell off all the excess inventory listed today, compared to the 4-6 week timeline that is traditional during a healthy market. But a new administration is taking the reins in Washington, with a promise to inject direct help from the Treasury into the ailing housing and mortgage markets. According to estimates by the National Association of Realtors (NAR) and other industry observers, such initiatives could finally put a floor beneath crumbling home prices. That means that 2009 may be a good year to put a roof over one’s head with upward equity appreciation potential and historically low interest rates.
|
During late 2008, the NAR estimated that if the government would pay down rates on mortgages to four and a half percent – by basically paying banks the same way homeowners typically pay points to get a more attractive rate – it would increase home sales by half a million units. But even without government help banks have already started offering 30-year fixed rates of about 4.75 percent. Mortgage rates started the new year by falling to a 50-year low for conventional fixed rate 30-year loans, which have been the mainstay of the American housing market for decades. The NAR is also pushing for Congress to make all homebuyers eligible for a $7,500 tax credit. That same incentive is now being offered to first-time buyers as part of the government’s Housing and Recovery Act – an emergency stimulus package that is directly aimed at real estate. It is also important to note that when the government refers to “first-time” home buyers their definition does not just include people who have never before purchased a home. The broader definition of a first-time buyer is someone who hasn’t purchased a house in the past 2-3 years, so even if you are a veteran at home ownership you may still be eligible for a tax credit, even if Congress does not extend it to everyone who buys. Of course many Americans are skeptical – and rightly so – of mortgage lenders in the wake of the subprime disaster. Almost everyone was either directly affected by unscrupulous lending or knows someone was a victim of grossly unregulated loan practices. People were sold mortgages they didn’t need, lured into teaser interest rates that suddenly spiked and become prohibitively expensive, or encouraged to drain all the available equity and valuable financial security from their homes through irresponsible second mortgage products. So perhaps the best news for the housing industry in 2009 is that the entire loan sector is under greater scrutiny and regulation. The dishonest mortgage brokers are either out of business or facing tough legal certification and licensing, and the honest ones who maintained integrity through the last bull market are happy to see higher professional standards and more stringent rules. That bodes well for the consumer, who can borrow to buy a home – with affordable loans that are insured by trusted agencies like the FHA – without having to worry unnecessarily about being misled. Meanwhile the stock market is scary and rates on interest-bearing instruments like bank certificates of deposit are anemic. But the real estate market offers real bargain basement value, collateral you can live in, and excellent potential for future price appreciation. That might mean that the place to put the nest egg in 2009 just might be in the nest. ### |
