rickjones posted on May 02, 2011 14:11
Wow, these are interesting times in real estate. Sales statistics keep improving, but the prices keep coming down. Lots of inventory, and slow rates of new home construction. Our President has indicated that the American Dream of homeownership may not be for everyone, and that renting may be the way to go for some sectors of the population. One only needs to look as far as one of the most prosperous countries on the planet, Switzerland, where homeownership is only 31 percent.
Homeownership in America has been strongly promoted for about 100 years, when the Department of Labor started an “Own your own Home” campaign. Since then, homeownership has been encouraged with tax advantages and various subsidies. It may all be about to change.
Fannie Mae and Freddie Mac insure loans, and given the recent collapse of the housing industry, banks are reluctant to issue mortgages without the backing of these agencies...and Fannie and Freddie are making it tougher.
Minimum credit score requirements have been increased. Over 25% of loan applicants are being rejected. In new condo complexes, 70% of the units have to be sold to get a loan approved.
Proposed rules in the Dodd-Frank bill could add more hurdles, including requirements that disqualify a buyer who is 60 days past due on any debt in the last 24 months. Elimination of interest deduction is also being discussed.
Interesting times indeed.