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How to Filter Through Bad News: Housing in Peril as Obama Fails to Get Financing Breakthrough June 29, 2009

Posted by John Watch in News Feed.
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Housing in Peril as Obama Fails to Get Financing Breakthrough | Bloomberg.com

It hasn’t been much more than a see-sawing of data,” Belsky said in an interview. “Housing has led the U.S. economy out of every recession for at least 50 years, and for that to happen again more stimulus is going to be needed.”

Correction: For Housing to lead the U.S. economy out of THIS recession, the “see-sawing of data” has to be corrected. The property data has to be stratified, analyzed and not taken for face value in order for a proper startegy to be presented. Here are a few questions to ask when reading this article:

Quote: “An inventory of 2.1 million unoccupied houses on the market, created by the fastest foreclosure pace in history, may be a drag on a revival.”

Question: What is the median sale price per square foot of these 2.1 million  homes? Are they under 1,250 square feet or above 2,000 square feet? With this information, we can pinpoint trends in the market, and produce important conclusions. Not to mention, an excess of 5 million homes were on the market already due to this most recent boom, where housing starts outweighed actual population statistics.

Quote: “The $8,000 first-time homebuyer tax credit in the U.S. economic stimulus package and a government program to subsidize some mortgage payments have had little effect, according to Eric Belsky, executive director of Harvard University’s Joint Center for Housing Studies in Cambridge, Massachusetts”

Question: Based on what?

Quote: Existing U.S. home sales in May rose 2.4 percent to an annual rate of 4.77 million, lower than forecast, and the median price was down 16.8 percent from the same month in 2008, according to the Chicago-based National Realtors Association.

Question: What about the median price from 2007. 2006 , 2005 and 2004? Check the public records. What does that data look like in comparison?

Quote: About 20.4 million of the 93 million houses, condos and co- ops in the U.S. were worth less than their loans as of March 31, according to Seattle-based real estate data service Zillow.com.

Question: Again, based on what?

Quote: About 50 percent of banks tightened requirements for prime borrowers in the first quarter, asking for bigger down payments and more cash on hand, among other things, the Fed said.

“Six years ago, standards were pretty permissive, and two years ago all you needed was a pulse,” Stern said in an interview. “Nowadays, even people who have reserves that equal amount of the loan are getting rejected.”

Question: Uh, wasn’t that the problem?

These are simple, common sense questions to ask yourself when reviewing information on the housing market. And if you don’t know the answers to some of these questions, ask yourself: Can I trust the information that has been given to me? Or do I have to go and seek out real answers?

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