HIstory is Made!
After a wild ride the election is over and history has been made with Barack Obama becoming the first African American US President Elect. We congratulate him and hope that he does as good a job running our country as he did running his campaign! If he does, then better times may be on the horizon soon. We look forward to entering a new period of peace and prosperity under his administration.
A lot of folks are considering their options right now as they re-evaluate their futures. The economic crisis will be with us until the regulatory system governing banking and investments is revised to better safeguard against excesses and greed by Wall Street. So in the meantime there are several things that may happen. We may see a second economic stimulus package move through congress, there may ba a moratorium on foreclosures, and we may see further securitization of mortgage backed debt by the US Treasury.
It is expected by most analysts that the Treasury window will stay open to aid failing lenders in the short term, but whether US automakers, insurance companies (besides AIG) or other businesses will get to borrow at low Treasury rates in return for preferred stock assets remains questionable. Since some of the bailout money is being used by recipient lenders to simply buy their competitors it wouldn't surprise us to see stronger Federal guidelines put in place to define acceptable uses for these funds.
It's likely that you'll some interesting ads in coming months offering loan modifications to lower mortgage payments. We caution you to check carefully before becoming involved. Some scams promising amazing results under this guise are already under investigation by the FBI. In spite of the government programs released through the FHA that promise to modify existing loans, so far we are not seeing a greal deal of success with these.
In the San Francisco Bay Area, the sales market varies depending upon your location, with eastern counties suffering the largest declines in value. Where is the botto,? To get an answer watch wage and jobs data closely in the coming months since this is a primary driver in the real estate market. The bottom line is that people will continue to buy when they have job income to support making mortgage payments.
The most recent jobs report showed initial jobless claims increasing. When jobless claims increase as a mult-month trend this signals that the economy is contracting. Many analysts agree that we are currently in a recession. But when prices are low this is the time to buy and some investors are picking up great properties in the Bay Area for bargain prices.
The main issue potential buyers face right now is their ability to get the loans they need. The credit crisis we are experiencing is affecting borrowers who need jumbo loans, those who need to state their income, and especially anyone trying to get a loan for an investment property. At Avatara we have an edge that helps these borrowers because we have so many lenders to choose from in placing our loans. If it's available we can get it, usually at the best rates available. We are currently seeing Jumbo loans returning to the market, bringing a sigh of relief to many in the Bay Area.
We think it is apparent that this year will be a slow one in terms of real estate sales volume, which according to Data Quick, is the slowest in the Bay Area since 1995. The good news is that change is afoot, both in government and the banking industry, which could lead to stabilization in early 2009.