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The market right now is mostly cash investors and first time buyers. With the increase in FHA loan amounts, the 8K credit and now FHA backing 125% LTV mortgages, not to mention the 3% down, FHA loans are quickly becoming the most common form of financing.
Also, not to nitpick, but a dearth of buyers says nothing about FHA being common or not. You could have 3 buyers in the whole world and if 2 went FHA it would still be the most common form of financing.
The point is, 20% is not the standard again or anything close to it. The Government is clearly prepared to do whatever they think is necessary to allow people to buy homes. Is that good? Probably not, but the idea that todays buyers have more skin in the game is wrong. We're just changing the name sub-prime to FHA backed.
The market right now is mostly cash investors and first time buyers. With the increase in FHA loan amounts, the 8K credit and now FHA backing 125% LTV mortgages, not to mention the 3% down, FHA loans are quickly becoming the most common form of financing.
Also, not to nitpick, but a dearth of buyers says nothing about FHA being common or not. You could have 3 buyers in the whole world and if 2 went FHA it would still be the most common form of financing.
The point is, 20% is not the standard again or anything close to it. The Government is clearly prepared to do whatever they think is necessary to allow people to buy homes. Is that good? Probably not, but the idea that todays buyers have more skin in the game is wrong. We're just changing the name sub-prime to FHA backed.
Interesting post - thank you.
It's clearly not a good situation for the RE market (as we knew it, before the whole debacle of the last few years began to unfold) when the majority of today's buyers are either speculators or those who are only able to buy courtesy of the Government - in other words: by courtesy of other taxpayers
the government is clearly acting against itself. it offers taxpayer funding of 8,000 dollars this year and 15,000 dollars next year to put people in homes but is willing to almost go back to the old lending standards to do it. i was watching an HGTV show where the girl buyer was putting zero down, getting the seller to pay closing costs, and getting 8,000 dollars from the government. this is clearly a situation that puts taxpayers at an extreme disadvantage especially when jobs are still disappearing and the economy is not yet stable.
We had to put 20% down on our condo years ago. The thing is just about paid for so I have no problem with a fairly large down payment. That being said, I do wonder where a family earning $30,000 a year is ever going to save enough money to make the down payment unless houses drop below $100,000.
maybe government should not interfere and let the market dictate what the houses are actually worth.
If you listen to politicians' rhetoric, the implication is that the only Americans who matter are those with mortgages. The "Free Market" is not a high priority; politicians cannot allow home values to fall, because the people with mortgages don't like that.
The grand scheme appears to be to entice young people to load up with an unrealistically big mortgage, so the older crowd can escape from their unrealistically big mortgage.
If that's the route they want to go, then personally, they need to put a sweeter deal on the table to convince me to participate in this scheme.
I thniik some in political circles again want to put people in homes that can't afford the home. But I doublt so many are willing to fall for aqgian as home values are not waht they were and certainly not the apprecaiting asset they were.I see nothing worong with 20% when you look at the incentive the govewrnamnt is doing really.
And then on top of all this new home construction in June jumped to the highest in 7 months.
Very conflicting info out there. The banks don't want to lend but new home construction is up.
*scratches head
June housing construction rises unexpectedly - Yahoo! News (http://news.yahoo.com/s/ap/20090717/ap_on_bi_go_ec_fi/us_economy_36 - broken link)
i am confused as to why this news would boost the market. that is just new construction and does not necessarily translate into new sales. if anything, it makes the foreclosure situation more difficult. i guess the market reacts to the job boost of the new construction.
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