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January 05, 2009
Housing Market Outlook for 2009
Recently, someone asked me, "How will the housing market do in 2009?". Now I admit that I cannot see into the future, however, some analysts are predicting that
this year may not be as bad as some are forecasting. Many even believe that the market will completely bottom during the first half of the year. Fact: If you have been waiting for the right time to buy a home, home prices have fallen more than twenty percent since '06. Fact: As I talked about the other day, rates on a 30 year fixed are at multi-year lows and we will probably see more incentives coming once Barack Obama takes office.
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Even though rates are so low right now, not everyone can take advantage because banks are tightening lending standards preventing many prospective home buyers from
entering the housing market. However, those who do qualify may not have an enormous impact, but should be able to keep the housing market somewhat stable. Repairing
the credit market is no easy challenge, but it must happen for the housing market to really begin to make a full recovery, or at least a significant one. Stops have
already been taken to begin the painful recovery process. The Fed recently cut interest rates to 0 to .25 percent. The government has dedicated a ridiculous amount of
money to be put toward the seemingly endless array of bailouts, lending programs, ways to stimulate the financial market, and toward saving many of our banks. Now you
may be thinking that the economy is still in trouble and the measures the government has taken have been futile, but I would disagree. While nothing is fixed, there
have been results and we will probably begin to see a turnaround sooner than most expect. As of now, people are too afraid to resume a life of risk, but if
there is enough stimulus injected into the economy, people's confidence will be restored and the tighter lending standards will begin to ease.
Now that the pressures on inflation have eased a bit, there are still many factors causing great concern about the economy. Investors have lost fortunes in the stock market and
and many are not quite ready to jump back in just yet. Some are putting their money in government securities and some are once again thinking that real estate
still remains one of the strongest investments.
Construction is down, but I believe this to be one of those necessary evils. The market cannot really begin to recover until construction slows at an even more
dramatic pace and the amount of foreclosures begin to decrease. Until that happens, home prices will probably continue to decline because the supply of homes
outweighs the demand. This will not be an easy process to go through, but the recovery process cannot take place unless this happens.
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