Survey shows many believe now is the best time to buy
While the housing market seems to have reached its lowest in the recent months, many Americans still believe that now is a good time to buy, anticipating that renting will be much more expensive than owning a house.
The latest housing survey conducted by Fannie Mae shows that the number of Americans who believe buying a home now is a good idea has increased from 64 percent at the start of the year to 70 percent this month.
Seventy-eight percent of the respondents also believe that home prices will either remain static or increase over the next year while 85 percent believes the same will be true for rental prices.
The survey also showed that more Americans expects that rental rates will be significantly higher than home prices, and will hike up by 3.5 percent on the average compared to only 0.9 percent for home prices.
Erate.com also suggests that the large number of shadow inventory of expected foreclosures, as well as the presence of other looming factors that could increase the risk of other waves of foreclosures, should be enough to keep home prices down to low levels.
But, according to the survey, the number of Americans who believed that housing is a safe investment slightly decreased by 3 points and 16 percentage points from the 2003 survey results. The housing market, however, still managed to land a second spot in preferred investments next to opening a savings or money market account.
Fannie Mae says that the survey only showed that consumers have a relative feeling towards the housing market and homeownership.
The survey results could be an indication that people are becoming more practical in their investments approach and are likely weighing the current scenarios within the housing market before deciding on whether to purchase or not. This could actually help the market sustain its viability in the long term.
The survey done between June and July of this year was compared to the results of the surveys made earlier this and in 2003. The results also showed that 54 percent thinks that getting a loan is more difficult today, which is actually 6 points lower than the January survey results.
But, the number of Americans who said that they would more likely rent than buy a house is up by 30 percent from the January figures.
Questions and Answers
A Fannie Mae foreclosure is a great help to the many people in the USA who cannot afford a house of their own. The cheaper price ensures that there will also be a smaller monthly payment, reducing the risk of default and repossession of the home. This is good for the lender and homeowner alike. It also means that a real estate agent can buy a house at bargain prices and sell it for a profit. They can still keep the house below the average price while making money on it.
Fannie Mae Homepath properties can be a good choice for first time home buyers and real estate investors. These properties were returned to lenders via foreclosure or deed in lieu of foreclosure. Most require repairs, but are priced below market value. Many qualify for government home buying grants.
With the market still feeling the shakeout from the tremors of the subprime mortgage fiasco, the Federal Reserve Chairman Ben Bernanke is now directing regulatory focus towards Fannie Mae and Freddie Mac. The Chairman recognizing the tremendous power of these two financial heavy weights as having the potential to bring the U.S. financial markets to its knees is looking for action. Fannie Mae and Freddie Mac (Government Sponsored Enterprises) have been recently chided by regulators regarding its cloudy accounting practices. That brought a lot of heat and attention to management. Comments by Bernanke with respect to the risk of some of credit challenged loans in the portfolios have mirrored a stock marked spooked by the comments and closely looking for future trends in that area. Recent stock plunges worldwide resulting in downturns has got the financial gurus on the edge of their chairs.
FHA has been losing market share to Subprime loans for quite some time now. With all the requirements for a company to qualify and meet the regulatory commitments to the do business many lenders threw up their hands and took their business to other loan products. Many subprime loan products were tweaked to look like a FHA product thus competition heated up. It heated up to the extent that FHA went from like 1.3 million loans to just a little over 400,000 loans in 2006
Home Path mortgage is a special financing program offered through Fannie Mae. This home buying program offers attractive incentives to entice buyers to purchase foreclosure properties. Finance incentives include allowing buyers to purchase properties with a low down payment and flexible mortgage terms.
Sternberg brings his "buyers" expertise after 30+ years as a real estate investor. This article is a must read for any investor dealing with Fannie Mae.
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