Between dropping interest rates and the government’s effort to make credit more attainable, there could be a large number of homes put on the market in the next few months. While this is certainly good news for buyers looking to purchase a piece of Marin real estate, the increased inventory of unsold homes could drive prices even lower, depressing the market even further. Meanwhile, it should serve to boost the housing market by bringing more buyers in. With legislators making such a concerted effort to stimulate the real estate market, alike should be tempted to jump into the market, particularly if interest rates remain low. The past week has brought very promising signs for the future of the real estate market. Mortgage rates fell sharply after the Federal Reserve, in an effort to nurture confidence that banks who purchase mortgage debt will have someone to sell them to, announced their plan on Wednesday to purchase mortgage debt. Earlier this week a report indicated that and building permits were higher than predicted. This is another indicator that confidence in housing markets is growing in spite of falling prices and low sales.
Many experts are hopeful of an economic turnaround based on government efforts to help the housing market. Mortgage re-finance applications have been growing, although some of those are coming from owners who are then putting their houses on the market. These people feel like they can’t lose because either they’ll sell the property or be able to get a lower rate on their mortgage. Experts claim that while financing can be obtained, it will be restricted more than in the past. It is also recommended that buyers as well as re-financing lenders explore all options available. Sellers are entering the market believing now is the time to trade up because they can get more value for their dollars with prices at record lows. All this leads to a noteworthy cycle: the large inventory of unsold homes will keep driving prices down, hurting sellers; while buyers are rewarded with tremendous savings.
An important factor in the future of the housing market is the willingness of banks to issue loans with lower interest rates taking hold. The market will only pick up dramatically if banks continue to be willing to finance buyers. The banks continue to face capitol ratio issues, hence should require higher credit scores and larger which will make it difficult for first-time buyers. This has some economists skeptical about a turnaround in the market. Meanwhile, homeowners looking to sell will be forced to list their properties at lower prices dictated by the local markets. Buyers, however, must face the reality that FICO scores of at least 625 and an average of 20% down are the norm to qualify for a mortgage.