If you have been watching this space over the last year, you have realized that there have been far more optimistic spaces than this blog regarding the mortgage and real estate market. However, you are likely to notice a change in tone over the next few months. The reason is that several factors are combining to ensure that early 2010 is likely to be the single best period to buy or refinance a property over the next several years.
First is the fact that the Fed has been backing the Mortgage Backed Securities markets. For most folks, the phrase you just read has little real world meaning. The bottom line is that the government has been spending a boatload of money holding rates down. The bucket of money they are using to do this is likely to run dry in the first quarter this year. Because of this fact, rates are likely to rise to somewhere between six (6%) and six and a half percent (6.5%) later this year.
Second is the increase in foreclosures. You may think that the foreclosure market is past us. Except for those of us directly impacted, we are all sick of hearing of it. This is hardly the case, though, for several reasons. First is unemployment. Unless you believe the government figures, unemployment is not getting better. It may have stopped getting worse, but it is not getting better, to be sure. Second, is the resetting loans and their impact on payments. Hundreds of thousands of adjustable rate loans are going to reset for the first time this year. That’s right, this year. Most of these homeowners have been unable to refinance, or they would have. Their properties will be coming to market and prevent prices from going up any time soon.
Finally we have the tax credit. The government has set the incentive tax credit for home buyers to expire in April. This means that you must move in the first quarter to take advantage. Word is that this time is will not be extended. Remember, a credit is much more valuable than a deduction and will impact your bottom line, depending on your tax bracket, 200-400% more than a deduction.
The bottom lines is that here in 2010, if you feel good about your job, good about the discounts in property and hate paying taxes, you are unlikely to get a better time EVER to buy a new property. Get out there now and take advantage. If you don’t you will be kicking yourself later.
