The new mortgage bill that passed last week may pose a ‘moral hazard’ for lenders, allowing lenders to make bad loans without losses, but it also poses an incredible opportunity for borrowers in 2008!
Especially first home buyers who are eligible for a $7500 tax credit if they ‘haven’t owned a home in the last 3 years.’
For the rest of us, the higher Fannie Mae/Freddie Mac “conforming” loan limits are made permanent at a higher $625,000 level and the agencies officially received a government guarantee that was previously implied. This is a real shot in the arm for real estate. This is positive news that could quickly reverse the downward trend in housing. Housing new ’supply’ is at a 14 year low, Housing demand is also at a low point, but the US population is increasing and prices are coming to equilibrium. The tax credit and new cash injection in the housing market can have nothing less than a positive effect.
Go long housing in markets with increasing population growth - second home markets with rare-air and restricted supply will be first to feel the positive effects. Baby boomers are being right-sized from industry and home-based businesses and consulting that requires teleconferncing and travel will fuel a boom in rural and recreational - traditional second home - markets.
People are choosing to work where they live, not live where they “worked”. Why not live at the ocean or slope?
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