Rates rising and tougher qualifying on the horizon?

[ctr70]

There are definitely a lot of dark clouds on the horizon for lending:

1. FHA wants to reduce it’s footprint in the mortgage market so it continues to raise monthly mortgage insurance (it’s twice what it was 6 mos ago)

2. Fannie Mae is making loans really expensive for everyone except 20% down and perfect credit

3. Rates have risen

4. If they ever get private label lending to come back (and that’s what the Gov wants to do), it ain’t going be at 4.5%

5. Fannie is looking to lower the max loan from $729k to $625k…that means super tough lending guidelines and big down payments for over $625k loans

6. The Gov is going to make banks have more skin in the game so they are more on the hook to buy back bad loans…this will make the banks even more conservative on lending

All this will result in making it a lot more expensive to own real estate and reduce the buyer pool. And it has to hit prices hard.

Starting in the late 1990’s California real estate was pushed up by the “tailwind” of easy lending. It will NOT have that same “tailwind” pushing up prices this go around. Appreciation will have to be driven by *income growth*. Which is the way it should be.

[SD Realtor]

I cannot think of anything better for the market or the taxpayers. Pricing will take a few months to react. Also as mentioned in a similar thread a few days ago this will increase the inequity of home ownership. Those with money, speculators, cash buyers, large syndicates that have been able to take advantage of massive govt incentives to buy in bulk will increase their holdings. I am not saying this is a good thing socially. However those that think prices will move drastically or in an immediate manner may be disappointed. Yet over a longer period of time those who are patient and have strong downpayments will be rewarded.

[SD Realtor]

I cannot think of anything better for the market or the taxpayers. Pricing will take a few months to react. Also as mentioned in a similar thread a few days ago this will increase the inequity of home ownership. Those with money, speculators, cash buyers, large syndicates that have been able to take advantage of massive govt incentives to buy in bulk will increase their holdings. I am not saying this is a good thing socially. However those that think prices will move drastically or in an immediate manner may be disappointed. Yet over a longer period of time those who are patient and have strong downpayments will be rewarded.

[SD Realtor]

I cannot think of anything better for the market or the taxpayers. Pricing will take a few months to react. Also as mentioned in a similar thread a few days ago this will increase the inequity of home ownership. Those with money, speculators, cash buyers, large syndicates that have been able to take advantage of massive govt incentives to buy in bulk will increase their holdings. I am not saying this is a good thing socially. However those that think prices will move drastically or in an immediate manner may be disappointed. Yet over a longer period of time those who are patient and have strong downpayments will be rewarded.

[SD Realtor]

I cannot think of anything better for the market or the taxpayers. Pricing will take a few months to react. Also as mentioned in a similar thread a few days ago this will increase the inequity of home ownership. Those with money, speculators, cash buyers, large syndicates that have been able to take advantage of massive govt incentives to buy in bulk will increase their holdings. I am not saying this is a good thing socially. However those that think prices will move drastically or in an immediate manner may be disappointed. Yet over a longer period of time those who are patient and have strong downpayments will be rewarded.

[SD Realtor]

I cannot think of anything better for the market or the taxpayers. Pricing will take a few months to react. Also as mentioned in a similar thread a few days ago this will increase the inequity of home ownership. Those with money, speculators, cash buyers, large syndicates that have been able to take advantage of massive govt incentives to buy in bulk will increase their holdings. I am not saying this is a good thing socially. However those that think prices will move drastically or in an immediate manner may be disappointed. Yet over a longer period of time those who are patient and have strong downpayments will be rewarded.

[lepetitangel]

Hi Sdrealtor,

AS a realtor yourself (indicated by your screen name), do you recommend clients not to buy now then? We’re in the process of looking but don’t want to buy if we know for sure trend is going down. We’re submitting a low offer soon but I wonder how much more room it has to go down (in CV).

thanks.

[lepetitangel]

Hi Sdrealtor,

AS a realtor yourself (indicated by your screen name), do you recommend clients not to buy now then? We’re in the process of looking but don’t want to buy if we know for sure trend is going down. We’re submitting a low offer soon but I wonder how much more room it has to go down (in CV).

thanks.

[lepetitangel]

Hi Sdrealtor,

AS a realtor yourself (indicated by your screen name), do you recommend clients not to buy now then? We’re in the process of looking but don’t want to buy if we know for sure trend is going down. We’re submitting a low offer soon but I wonder how much more room it has to go down (in CV).

thanks.

[lepetitangel]

Hi Sdrealtor,

AS a realtor yourself (indicated by your screen name), do you recommend clients not to buy now then? We’re in the process of looking but don’t want to buy if we know for sure trend is going down. We’re submitting a low offer soon but I wonder how much more room it has to go down (in CV).

thanks.

[lepetitangel]

Hi Sdrealtor,

AS a realtor yourself (indicated by your screen name), do you recommend clients not to buy now then? We’re in the process of looking but don’t want to buy if we know for sure trend is going down. We’re submitting a low offer soon but I wonder how much more room it has to go down (in CV).

thanks.

[SD Realtor]

Every case varies lepetit. Trying to find a market bottom is really hard. I can make an argument to buy and I can make an argument not to buy. I will tell you that a fair number of buyers are buying moreso because of the destruction of our currency and want to take advantage of low rates. It is entirely feasible that you may wake up a few years from now and see double digit interest rates. If you are sitting on a 4.5 or 5.5% mortgage you may be pretty happy. While it is a SURE THING that home prices would depreciate substantially in this environment it is not a gaurantee that the depreciation will scale. Maybe it will, maybe it will not.

The problem is that there are always ALOT of people with cash, and by this I mean larger entities, that will be able to set a market floor by purchasing homes for investment and getting a stable return on them. So does that floor necessarly match the rate hike? I do not know.

What I recommend to my clients is to do what is right for them. I tell them what I think will happen, that both lending standards will certainly tighten up, and that inevitably interest rates will go up. Just like food and fuel and basic commodities will go up. Look at the price of cotton today. It is as high as it has ever been!

Sorry to go off track. It is just that we are in uncertain times and it is hard to make a choice. I know many people are looking for a return on money right now including myself and they are purchasing rental properties. I think opportunity abounds. I think that the govt has shown that they will indeed use taxpayer money to bolster the housing market. I also think that they are in a precarious perch with regards to the far east bolstering our appetite for defecit spending.

I think that you should continue with the CV search you have been on. It never hurts to offer lowball offers. All they can say is no. CV is one of the strongest areas in San Diego… Still lots of sellers in denial. If you can afford the home and are secure with your jobs and do not plan on moving then you should be okay.

[SD Realtor]

Every case varies lepetit. Trying to find a market bottom is really hard. I can make an argument to buy and I can make an argument not to buy. I will tell you that a fair number of buyers are buying moreso because of the destruction of our currency and want to take advantage of low rates. It is entirely feasible that you may wake up a few years from now and see double digit interest rates. If you are sitting on a 4.5 or 5.5% mortgage you may be pretty happy. While it is a SURE THING that home prices would depreciate substantially in this environment it is not a gaurantee that the depreciation will scale. Maybe it will, maybe it will not.

The problem is that there are always ALOT of people with cash, and by this I mean larger entities, that will be able to set a market floor by purchasing homes for investment and getting a stable return on them. So does that floor necessarly match the rate hike? I do not know.

What I recommend to my clients is to do what is right for them. I tell them what I think will happen, that both lending standards will certainly tighten up, and that inevitably interest rates will go up. Just like food and fuel and basic commodities will go up. Look at the price of cotton today. It is as high as it has ever been!

Sorry to go off track. It is just that we are in uncertain times and it is hard to make a choice. I know many people are looking for a return on money right now including myself and they are purchasing rental properties. I think opportunity abounds. I think that the govt has shown that they will indeed use taxpayer money to bolster the housing market. I also think that they are in a precarious perch with regards to the far east bolstering our appetite for defecit spending.

I think that you should continue with the CV search you have been on. It never hurts to offer lowball offers. All they can say is no. CV is one of the strongest areas in San Diego… Still lots of sellers in denial. If you can afford the home and are secure with your jobs and do not plan on moving then you should be okay.

[SD Realtor]

Every case varies lepetit. Trying to find a market bottom is really hard. I can make an argument to buy and I can make an argument not to buy. I will tell you that a fair number of buyers are buying moreso because of the destruction of our currency and want to take advantage of low rates. It is entirely feasible that you may wake up a few years from now and see double digit interest rates. If you are sitting on a 4.5 or 5.5% mortgage you may be pretty happy. While it is a SURE THING that home prices would depreciate substantially in this environment it is not a gaurantee that the depreciation will scale. Maybe it will, maybe it will not.

The problem is that there are always ALOT of people with cash, and by this I mean larger entities, that will be able to set a market floor by purchasing homes for investment and getting a stable return on them. So does that floor necessarly match the rate hike? I do not know.

What I recommend to my clients is to do what is right for them. I tell them what I think will happen, that both lending standards will certainly tighten up, and that inevitably interest rates will go up. Just like food and fuel and basic commodities will go up. Look at the price of cotton today. It is as high as it has ever been!

Sorry to go off track. It is just that we are in uncertain times and it is hard to make a choice. I know many people are looking for a return on money right now including myself and they are purchasing rental properties. I think opportunity abounds. I think that the govt has shown that they will indeed use taxpayer money to bolster the housing market. I also think that they are in a precarious perch with regards to the far east bolstering our appetite for defecit spending.

I think that you should continue with the CV search you have been on. It never hurts to offer lowball offers. All they can say is no. CV is one of the strongest areas in San Diego… Still lots of sellers in denial. If you can afford the home and are secure with your jobs and do not plan on moving then you should be okay.

[SD Realtor]

Every case varies lepetit. Trying to find a market bottom is really hard. I can make an argument to buy and I can make an argument not to buy. I will tell you that a fair number of buyers are buying moreso because of the destruction of our currency and want to take advantage of low rates. It is entirely feasible that you may wake up a few years from now and see double digit interest rates. If you are sitting on a 4.5 or 5.5% mortgage you may be pretty happy. While it is a SURE THING that home prices would depreciate substantially in this environment it is not a gaurantee that the depreciation will scale. Maybe it will, maybe it will not.

The problem is that there are always ALOT of people with cash, and by this I mean larger entities, that will be able to set a market floor by purchasing homes for investment and getting a stable return on them. So does that floor necessarly match the rate hike? I do not know.

What I recommend to my clients is to do what is right for them. I tell them what I think will happen, that both lending standards will certainly tighten up, and that inevitably interest rates will go up. Just like food and fuel and basic commodities will go up. Look at the price of cotton today. It is as high as it has ever been!

Sorry to go off track. It is just that we are in uncertain times and it is hard to make a choice. I know many people are looking for a return on money right now including myself and they are purchasing rental properties. I think opportunity abounds. I think that the govt has shown that they will indeed use taxpayer money to bolster the housing market. I also think that they are in a precarious perch with regards to the far east bolstering our appetite for defecit spending.

I think that you should continue with the CV search you have been on. It never hurts to offer lowball offers. All they can say is no. CV is one of the strongest areas in San Diego… Still lots of sellers in denial. If you can afford the home and are secure with your jobs and do not plan on moving then you should be okay.

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