Housing Crisis Myth
Since my last post “Lending Crisis May Soon Be Over” I have been inundated with phone calls and emails for an explanation of why I feel that the worst may be behind us in this recent housing market crisis.
We will undoubtedly feel the affect of the sub-prime fiasco through 2008. However, the figures of mortgages in default are minute when you look at the number of sub-prime loans and even smaller when you look at the total housing market. The figures simply do NOT justify the “Chicken Little” “the sky is falling” mentality of the liberal press.
The larger problem is the lack of confidence by consumers all of this negative press has brought about. Perception is the key and the perception of the crisis is far worse than the crisis itself.
Even for home owners that find themselves owing more on their home than it is worth can simply sit it out and wait for the market to rebound. And unlike finding yourself with stocks that have been devaluated your home is a usable and necessary asset that provides utility while you await a market correction.
In addition to pending legislation to assist distressed homeowners the suggestion by the Bush Administration that lenders work with troubled borrowers appears to have resonated. If you are in a situation where your ARM (Adjustable Rate Mortgage) has raised to a level that is no longer sustainable simply contact your lender. You will in all likelihood discover they will work with you. This will enable you to keep your home and credit rating which is far more desirable than the alternative.
Just remember that history teaches us that the real estate market will rebound. It always has. And you will once again find yourself with equity in your home. Stop listening to the doomsayers and research the REAL figures for yourself.
While I follow real estate markets nationwide I of course pay special attention to Columbia real estate trends. Just like the rest of the nation, new home starts in Columbia MO are down. This will reduce inventory and cause housing prices to stabilize. Sales of existing and new homes are down slightly but by no means dead. The only viable explanation for the recent downward trend in home sales is the negative press the housing industry is receiving nationally. Once excess inventory is absorbed the local market will get back on track.
With fewer housing starts in recent months in combination with stronger consumer confidence the panic selling should subside and the market stabilize.
But the worst is only over if we ignore an extremely biased main stream media and research the facts for ourselves.
~Rhonda McMillan
Broker
