New Housing Market Policies Put Transferees in Good Position to Buy

Working for a relocation company, I?m privy to real estate trends in a variety of markets across the country, as well as the country as a whole. Surely, housing numbers are constantly fluctuating, but if you look at patterns over longer periods of time, they can tell you something important. Real estate has been my business for the past 25 years, so I?ve sailed through the ups, weathered the downs and managed through everything in between. That?s why I try to put housing numbers, and policies, into a broader perspective. Essentially, what is good for today may not be good for tomorrow ? and if it?s not good for tomorrow, are we really any better off in the long run? And is it important if we are?

In an effort to stir the economy, the FED recently announced that it will buy 40 billion dollars a month in mortgage bonds.? The theory is that cheaper funds will improve the sluggish housing market.? Although interest rates have remained at, or near, record lows for quite some time, this decision is an attempt to make more money available, and housing more affordable, for ?more people.? Does this sound familiar?

Politics aside, there is a problem with this scenario.? And, yes, we?ve seen it before. This set up will create similar problems to those that arose from sub-prime lending.? As more money becomes available at a lower interest rate, purchase power for home buyers will go up across the board.? For the same monthly payment, people will be able to buy a more expensive home.? But, so can everyone else.? The net effect is that home prices will start to creep up due to supply and demand.

In an election year, this looks great because the housing market is appearing to grow.? As home values increase, property taxes will also go up which will help prop state and local coffers. This would all be great ? if it was genuine. But, once again, this is a non-market driven artificial stimulus.? What happens when the FED stops pouring money into the mortgage bond market?? We can hope the recovery will pick up steam by that point, but there are no guarantees. The greater possibility is that, much similar to the Cash for Clunkers stimulus, housing sales will fall flat again in the following months as home prices have been inflated and cheap loans will have dried up.

As a result, now is a good time to buy and here is why:

• The bond buying has just begun.? Interest rates are the lowest they have been, and the home prices are just beginning to climb. Today, you will be able to purchase a home closer to its real market value which will help you down the road when it is time to sell.

• This is the off season.?? The busy spring and summer seasons have come to an end and there is still a significant inventory on the market. ?With fewer buyers actively looking, sellers are eager to unload their properties.

• The rental market is tight.? Even with low interest rates, lenders are hesitant to loan money to anyone with debt loads and credit scores previously quite acceptable.? Therefore, the rental vacancy rate has dropped, forcing remaining options? to go up in price. This always makes home ownership, with its deductible mortgage interest, more attractive.

• If you are upsizing, it is still a good move. The value you loose on a lower priced home should be offset by the value gained in a higher valued home that has lost the same percentage value.

Lenders are still cautious, so financing a home may still be a challenge.? If you have transferees who are moving, the first thing they will need to do is discuss their creditworthiness with at least one, if not two, reputable lenders.? Not only will this help them to focus on the right range, but they will also receive counsel on the right moves to make to maintain or achieve an acceptable credit score.

Further, ensure that your transferees have access to experts so that they can make informed decisions about buying and selling their homes with these new policies on deck.

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Source: http://blog.xonex.com/1645/relocation-issues-and-trends/new-housing-market-policies-put-transferees-in-good-position-to-buy

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