Fall is full of good things...

Fall is full of good things...
Tigers beat the Yanks, Lions winning some games...

Monday, October 6, 2008

New bailout package... Daves thoughts

Hey all...

Love the idea or hate it, we have a new new bailout package in place. My head has been swimming for two weeks trying to talk with people in the know, and analyze the info spilled on the t.v. from the talking heads.

For what it's worth, here's my take on it (from a Realtors perspective). The last several months we have seen banks tightening up standards for new mortgages as well as other sources of credit. Appraisers have been brutally adhering to stiffer and stiffer requirements placed on them by the banks. Unless you have spotless credit (a tall order these days), banks either deny loan applicants or bump them into higher interest packages.

Small businesses find it very difficult to obtain loans for cash flow, and even home equity lines of credit have been frozen (even if you were current on your debt repayment).

This tightening of the reigns is a direct result of mortgage companies lenient lending policies over the last several years, and the subsequent decline in the real estate market and plummeting home values. Many mortgages were written in the past few years for 100% of a homes value, plus a 10% equity loan allowing a buyer cash out, and no money down. Some professionals argue that too many loans were given to people that couldn't afford them in the first place... that's a topic for another day.

People, when faced with the realities of losing their jobs or taking wage cuts, often find themselves in the quandry of selling a home they have to pay the bank to get rid of... the result... they simply find it more financially beneficial to flip the keys to the bank and move on.

The bailout in theory allows the fed (you & I) to buy these mortgages off the banks books and relieve some of the pressure from them. This again in theory allows the bank a clean slate, and should make obtaining a loan (hopefully with a little common sense behind them) easier.

All that said... I am reservedly optimistic about the bailout. Can I say I was against it, but now I'm for it ? :0) (not to say I won't be against it again in the coming months)... no one seems to really know what the true outcome will be.

The real estate market and it's impact on our economy...

There are a few things we know about our economy today. Our auto industry is in trouble. We need to find a way to compete in the world market, or find replacement industry for our remaining work force. In the mean time, we currently have too much local business to support the local workforce and way too many homes on the market to be purchased by way to few buyers. The economy has a natural trickle down effect, and business will self level, and housing prices have been dropping and will stabilize sooner than later (we all hope).

While we wait for both to happen... this is a tremendous opportunity for buyers. I've preached this before, but if you are a first time home buyer or are looking for vacation home or investment properties, now is the time to buy. If you have stability in your income, and can qualify for a mortgage (I can help with that), housing prices are at levels similar to 10 years ago in some cases.

If you have a home to sell and want to buy up... now is the time. As long as you have equity and don't need to pay the bank most of the value of your home to get out, take your lumps on what you thought your house was worth, and know and understand the home on the other side (the high side) of the transaction is experienceing the exact same thing. You will undoubtedly make up the difference of the loss of your sold home plus plus plus on the buy side.

Take the initiative, price it smart, and you won't regret it. When we finally see real estate beginning it's rebound, we'll see the entire economy in detroit follow suit. That's how important your transaction and faith in our community are.

Give me a call if you need any advice about home values, obtaining a mortgage, or any general info about the market... I'm happy to talk.

Family...

At long last, David got out of the Army on 9/11 this past month. He returned home after a 32 hour drive from California on the 13th... just in time to go to the Lions game and watch them get crushed... but it was a good father/son outing anyway.

Bella & Lauren were pretty excited for him to come home as well, and Bella is soaking up tons of attention her dad is able to give her with his current vacation status. Dave was able to land a job at Tacom and starts work there on October 15th... thanks for all your support over the last 7 years.

Jessy & Anthony are doing well... Jessy is in the middle of her most difficult semester to date at Western, and can't wait until April when she is finished with her masters. Anthony is hard at work back in Chicago, and although he hardley rubs it in our face... gets to be a fan of three teams that are better than the Detroit teams... Too bad about those "Black Hocks".

Kelly & I are well, golf and softball are over, and bike season is just about to end. Kelly is playing hockey already this year, and I'm about to start my hibernation phase...

Again thanks for all of your referrals, they make my business flourish.

See you in November... after election day.

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