With it now being the first week in July 2011 is half over. Let's look back over the first six months and see what we believe were the items that have had the biggest impact on the real estate industry this year.
Amid Warnings of a Double-Dip Recession Prices Began to Stabilize Yet Let's Look At Why.
Prices continued to retreat for the first few months of the year. Some called for another major fall in prices and almost all recalculated their projections to show continued depreciation. Just as these new projections were made available, some pricing indices announced that by a minimal percentage values actually increased. Let's look at why. Distressed properties (foreclosures and short sales) have a negative impact on the values of all properties in an area. Because of legal challenges and paperwork, the flow of these properties to the market was virtually shut off in the first part of this year. At the beginning of the year, most experts believed the banks would correct these challenges by the end of the first quarter. That didn't happen and therefore many of these properties were delayed coming to the market. This is a major reason why prices seemed to recover: there were fewer discounted properties available for sale. Most now believe that the banks are close to having the above mentioned challenges worked out and that prices will again begin to soften towards the end of 2011.
The Government Wants Out of the Mortgage Business
From the original outline of the Dodd-Frank regulations to the talk of closing Fannie Mae and Freddie Mac to the proposed Quality Residential Mortgage (QRM) guidelines, the government has made it very clear that they want to dramatically limit their involvement in the mortgage industry. What will come of this? Will private industry step up and fill the void created? What will be the real cost to the consumer? Only time will tell.
The News Media Begins to Announce "Now Is the Time to Buy!"
With prices and interest rates at historic lows and the chance that mortgages will become more costly as the private sector steps in, many in the main stream media are announcing that buying a home now makes sense. In the last 45 days, The Wall Street Journal, Forbes Magazine, National Public Radio and CBS Money Watch have all ran articles calling for the readership to consider buying now!
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