Yesterday, President Obama outlined his plan for helping the real estate industry to rebound. You can read an executive summary by clicking on this link: Homeowner Affordability and Stability Plan
We had an opportunity to hear Dr. Lawrence Yun, Chief Economist & Senior Vice President of the National Association of REALTORS® address the California Desert Association of REALTORS® and Dr. Yun spoke about the “stimulus” package and what is being done about the current malaise in the housing sector.
The problem, as identified by Dr. Yun, is that Wall Street created the investment vehicle called “Mortgage backed Securities” compromised of the infamous “sub-prime mortgages” and then marketed them not only to American investors but also to worldwide investors and the collapse of those securities took the whole world with them. Because this is a global problem it is extremely crucial that whatever the government does to jump-start our economy work.
While Dr. Yun made several comments about the different approaches to solving the current fiscal melt down, here are a few points regarding housing that I found particularly encouraging.
The Government is proposing a $15,000 tax credit to any homebuyer who purchases a home in the next few years.
Nationally, home prices have declined to about 1999 levels, which makes them quite affordable at this time. In the Coachella Valley, they have declined to about 2004 levels.
Mortgage rates are at a 50-year low and probably won’t go much lower.
The bottom line is that we have an attractive tax credit for purchasing well priced homes at record low interest rates and if the TARP funds and the stimulus package do anything to loosen up tight credit we should see a marked and welcome improvement in the local real estate market. Dr. Yun expects that each quarter of 2009 will improve over the same quarter of 2008 and that the rebound is under way.
There are incredible buying opportunities available right now. If you are interested in buying or selling property in the desert, please give us a call.
Click here to see Dr. Yun’s PowerPoint charts.