The "real estate recovery" (or market bottom called), which has been trumpeted by the "drive by media" (translation - they are too lazy to do any real research) for almost a year now, is a fraud, a sham. All we are seeing is the result of artificial government market propping. I cover this in my blog posts: Real Estate Recovery or More Problems (Short Sales and Foreclosures)?, US Government Provides Funding For 95% Of Mortgages, New Subprime Lender: The US Government and Sad Loan Modification Story. If you do not want to read them the key points are below:
- 59% of all home sales in 2009 are to buyers with FHA, VA, USDA and other government guaranteed/insured/subsidized loans.
- The US government is now purchasing about 95% of all mortgage loans via Fannie Mae, Freddie Mac and Ginnie Mae. "Lenders" are really nothing more than loan brokers.
- Government promoted "foreclosure resolution" and "loan modification" programs are nothing more than subprime schemes. Homeowners are given temporary rate and payment reductions, but the real problem (negative equity) is not addressed. The result will be more foreclosures and short sale in the future as these modified loans re-default (most do), or expire. The negative equity will remain and until it is addressed, no real solution will be offered to this financial and real estate mess.
- The $8,000 first time home buyer tax credit caused an additional 350,000+/- home sales to occur, but about 1,900,000 people will receive the credit according to NAR (these numbers will be much higher due to the recent extension). The result is that each one of those additional 350,000+/- home sales cost approximately $43,000 (1,900,000 x $8,000 / 350,000) in taxpayer money. Based on the typical 1st time buyer home purchase price of $200,000, the cost of each additional sale created was over 20% of the sale price. Clearly, this program is absurdly costly and has no merit. All the tax credit is doing is temporarily propping up housing prices so they stay high relative to historical norms. The home buyers who pay retail prices for homes due to the tax credit will end up the next generation of underwater homeowners, stuck in the homes (prisons) for many, many years due to the negative equity unless they want to short sell their homes.
- Sellers - If you think you might want to sell soon do not wait. Sell now before the market gets worse. This winter and the spring of 2010 will be your window before the government market propping starts to fail.
- Buyers - If you cannot wait a few years to buy a home or other property when the market hits bottom I recommend that you buy only short sales, foreclosures, bank owned properties and other distressed properties in order to price in the coming market decline.
If you are a home buyer or real estate investor in Middle Tennessee who is interested in purchasing a Fannie Mae foreclosure, a Freddie Mac foreclosure, bank foreclosure or REO, a short sale, or other distressed real estate in order to get a great home or investment property at an attractive price without dealing with the difficult REO/foreclosure listing agents and you want aggressive and professional buyer representation, please contact me, or visit my website Search the Middle Tennessee MLS - Find Middle TN Short Sales, Pre-foreclosures, Foreclosures & REO's so that you can find foreclosures, short sales and other distressed real estate and homes in Middle TN. I help home buyers in Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN.
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