After studying the facts on the real estate market as an investment opportunity
I couldn't say it any better than the statements below from Keeping Current Matters:


"Forget stocks. Don’t bet on gold. After four years of plunging home prices, the most attractive asset class in America is housing. Let’s state it simply and forcibly: Housing is back. Two basic factors are laying the foundation for dramatic recovery in residential real estate. The first is the historic drop in new construction … The second is a steep decline in prices, on the order of 30% nationwide since 2006, and as much as 55% in the hardest-hit markets. The story of this downturn has been an astonishing flight from the traditional American approach of buying new houses to an embrace of renting. But the new affordability will gradually lure Americans back to buying homes. And the return of the homeowner will start raising prices in many markets this year."

I hope buyers are not sitting on the fence too long.

The latest information from Keeping Current Matters (my favorite source for real estate information), should be of interest to both buyers and sellers . Here is a summary of their most recent report and concerns for the housing market and I could not agree more.

• It seems that our Federal Government is attempting to set limits as to what defines a "quality residential mortgage" (QRM) and while we may need lending reforms, it seems that many lenders and organizations that are involved with the real estate industry have concerns about how this will affect the housing recovery. Jack and I have these same concerns as we feel these guidelines harm creditworthy buyers and the housing recovery itself.

• The Government is in the process of making home ownership more expensive or out of reach for millions of people through higher downpayments and equity requirements. They are proposing that we move from a 5% to 10% downpayment on some loans and even to 20% on others. Even where loans have strict underwriting regulations in place.


• Based on 2009 income and price data it would take 9 years to save $10,000 and 14 years to save $20,000.


• A buyer could seek a non-qualified loan but this would require a higher interst rate and even a 1% increase in interest rates would cause over $4 million people to not qualify for the median home price ( according to the

National Association of Home Builders . )

These Governement proposals harm buyers wanting to buy a home and does not offer any help for homes that are defaulting.

Considering the changes that could occur to the mortgage market, this could be the best time to buy after all.

Are Homes Costing More?

We are beginning to see more activity and buyers seem to be recognizing good deals and
well priced properties. There is more of a sense of urgency as we hear rummors about
Freddie Mac and Fannie Mae being terminated and lenders being put on salaries instead of commissions.
Everyone is wondering what affect it will have on buyers getting mortgages in the future

As I mentioned in my last Blog I hope buyers are paying attention to the interest rates not home prices.

The Primary Mortgage Market Survey released by Freddie Mac showed that the 30 year fixed rate mortgage was at 5.05%. Long term bond yields jumped which caused interest rates on a 30 year
fixed rate mortgage to rise to the highest level since the last week in April of 2010. So prices
have remained stable but interest rates have risen dramatically in the last 90 days.
National median prices have gone from $170,300 in the 4th quarter of 2009 to $170,600
in the 4th quarter of 2010 which is only a o.2 percent change. Even if prices fall another 10% this year the cost of a home
will increase if interst rates go up more than 1%. So, I hope buyers are worrying about where their
costs will go later in the year not prices.