Well contrary to popular belief (I am a professional buyer’s broker in the metro Columbus, Ohio real estate market) the Obama Stimulus Package as signed will be LOUSY for housing and only delay the recovery!
What? Aren’t many housing groups and builders in favor of it? Yes they are, but that doesn’t mean it is good for you or us (the U.S.).
I’ll cover the details of the Federal Tax Credit for first time buyers in my next blog post, but for now the renegotiation of “toxic assets” is only going to prolong the recovery. Here’s why…
Let’s assume there are 100 homes in the whole USA. About 60 of them are owned free and clear. 40% needed financing of some kind. So of those 40 homes that needed financing 4 of them were purchased by people who really should not have been allowed to buy them, but greedy builders and banks let them buy with no downpayment, no closing costs and below market interest rates.
So now these 4 homes are in default. Once they get foreclosed on and repurchased they will no longer be on the market dragging everyone else’s home values down. But by allowing “toxic” homeowners to slide with renegotiated loan rates will only exacerbate the problem!
Other neighbor’s who are holding on barely to their homes will look at their bailed out neighbors and say to themselves, “Gee, let’s stop making payments so we can get a better rate too!” And when that happens another wave of defaults will occur – trust me!