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Historic Window of Opportunity for Home Buyers

Perhaps you have noticed the economy is struggling in 2009. That unemployment nationally is at a 25 year high of 8.1%.

Did you notice the largest spending bill in history was passed in the form of a stimulus package? That trillions of dollars have been injected into financial markets since September 2008?

That the proposed omnibus spending bill is four hundred ten billion dollars, which includes nine thousand earmarks? That hundreds of billions of dollars in bail out money has been lent to insurance companies and auto makers? That the proposed federal budget is asking for deficit spending that exceeds the previous eight years combined? That two hundred seventy five billion dollars is marked to bail out homeowners in distress?

Did you know that the combined amounts of money mentioned above exceeds all the money spent by our government since its' founding to this point? That includes over two centuries and numerous wars. If it took over two centuries to pay for all government spending up to September 2008, how long will it take to pay back the amount spent or proposed since September 2008?

Your guess is as good as mine, however I do know and so should you, that it will be painful. There are only two ways the government can pay its' way; taxes, or inflating the money supply, which it has more than doubled since last September. Either way the American people are in for a rough ride, and will pay either by having their pay confiscated by higher taxes, or their buying power diminished through hyper inflation.

Then comes along congress attempting to pass a cramming bill, and probably will. This legislation proposes giving the authority to bankruptcy judges to cram down the principal amount of the filer's mortgage so they won'y lose their home.

A quick example. A couple files for bankruptcy and has a $100,000 mortgage. Due to the loss of income due to the economy, the judge determines this family can afford only a mortgage of $40,000. The judge crams down the principal owed, and the bank suffers a $60,000 loss. Now imagine this scene playing out hundreds of thousands of times across the nation each year.

The banks will not absorb the loss. They will estimate the higher cost of doing business and protect themselves by raising mortgage rates. One lender said if this legislation is passed that interest rates could increase by one to three percent by the summer of 2009.

Just when the housing market is beginning to show signs of turning the corner, this legislation would diminish the buying power of every home buyer, and eliminate many others from the market. What do you think will happen to home values, and prices?

The government just passed an eight thousand dollar tax credit for first time home buyers to attract buyers to the housing market. This is an example of legislation, and tax money that would have a positive impact upon the market. The tax credit will be totally neutered by this cramming legislation.

The window of opportunity to buy a home at fifty year low interest rates hovering around five percent could close as early as the summer of 2009 if this cramming legislation is passed. If the legislation is defeated, the window of opportunity is in jeopardy with inflation on the way resulting from the biggest spending spree by our government in history. My prediction is by the end of 2010 we could see double digit interest rates.

For veteran agents like myself, it'll be deja vue all over again, reliving the 1980's.

Seed Newsvine

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