Today with all the doom and gloom of giant companies crashing, others on the brink of extinction, real estate foreclosures and financial markets in turmoil in ways unseen since the 1930s Great Depression, is the worst finally over? While we are in the mix of this turbulent hostile economic environment, in my opinion there is light at the end of the tunnel.
At the height of the real estate boom, people were obsessed with the illusion of home ownership. With a quick return of profit, paying ridiculous prices and too-good-to-be-true financing, many failed to see the warning signs of a turning market until it was too late. There is no denying that we are in a recession, but the housing and financial markets are starting to stabilize, opening the doors to an economic recovery.
Why am I so optimistic? Our government is going to great lengths to subdue the recession. While we can all agree that some methods will not work, we can all agree that doing something is better than nothing and more importantly, that some are already working.
The Modification Recovery Plan is preventing further foreclosures and keeping more families in their homes. Our U.S. Treasury is buying more than $1 trillion in mortgage backed security bonds, which are single-handedly keeping our mortgage interest rates at historic lows. The up to $8,000 maximum tax credit to qualified first-time homebuyers and the California $10,000 new construction incentive are getting homebuyers off the fence and into homes.
Home prices are more affordable. In some places, including Bakersfield, home prices have dropped more than 50 percent from their high. In Kern County we are seeing more than 700 homes listed under $100,000.
In February, for the first time in almost a year, economic reports showed higher gains in home prices and an increase in new construction and existing home sales. Fannie Mae is allowing up to 10 financed mortgages, which will increase investor participation. The limit used to be four.
Despite tougher qualifying financing guidelines, there are buyers qualifying and there are more multiple offers on bargain homes.
Yes, this is only my opinion. I see good things happening in our Bakersfield market. Now I might be wrong and our real estate market may continue to deteriorate, but what if I am correct?
Should you take action now, or wait until buyers incentives expire, home prices and interest rates increase while there are more buyers and fewer homes on the market to choose from?
Read the signs; it’s your call!
Art Esparza is manager and owner of Mortgage Connection in Bakersfield.