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Friday, 14 May 2010

Where is the housing market headed?

Where is the housing market headed?

During the last several quarters I have been asked many times whether I think we are at the bottom of the market.  As any realist would admit, if I knew the answer to that question, I wouldn’t be writing this blog.  I’d be out taking advantage of the market to position myself for the eventual direction.  So, before we get started, I want to make it perfectly clear that I don’t have any better visibility to what the price of real estate will be in my neighborhood in 12 months than you do – or maybe anyone does.  BUT I think it’s important that I publicly share some of the data points that might make you and everyone else who is interested in the value of real estate form an opinion.

Here goes:

Positives – We are in the lowest interest rate environment EVER!  In fact, when you consider that the mortgage interest on a home loan is deductible from your income tax, the net interest rate is as low as it has ever been.  In many areas of the country it is less expensive to own a home than rent.  We haven’t been in this position since the last real estate crash back in the ‘80’s.  Another positive is that new home construction has been pretty much non-existent for the last several years.  During this time more people are entering the “home ownership” phase of their life and will be buying.  This bodes well for the demand side of the equation.  The best positive is the rebirth of the FHA.  American Heritage Lending specializes in FHA Streamline Refinances as you may already know.  We also monitor this market for changes and are happy to report that this segment of the lending business is becoming more and more popular for first time home buyers and repeat buyers.  The reasons are simple…the down payment is small (3.5%), the rates are the same or lower as conventional rates, and the guidelines are favorable.  In fact, if you have a loan that is FHA insured, even if you are under water on the equity you can refinance to take advantage of the lower rates.  This is not yet entirely possible with conventional programs.

Negatives – Foreclosures and “shadow inventory” still loom in great quantity.  The job market seems to be stabilizing but unemployment is still high.  The number of borrowers who are more than 60 days behind on their payments is still increasing.  And, compared to historical data, this number is higher than it’s been since the Great Depression.  Many experts say that nationally we are back to prices from 2003.  In many areas this might even be conservative.  Additionally, the loan programs of yesteryear are continuing to come due.  These adjustable rates don’t cause too much harm as the index that they are based on is at all time lows.  However, the homeowner who wants to refinance into a fixed rate is not able to for reasons of equity, income, or credit.  As we all know, the lending industry has made it very difficult for borrowers to qualify.  The other factor that is weighing on the downside of the market is the participation from our government.  This is not a political statement of any kind, rather, just an obvious statement that never before has the government of our country put so much capital to work shoring up the efforts of every bank, lender, servicer, etc.  At some point this money will need to come out of the market and be paid back.

Conclusion – I leave it to you to decide which way you think this market will go.  In fact, I would love to hear from you which way you think we’re headed and why.  You can reach me at  The good news in all of this is that your primary residence is a place to raise your family and provide shelter.  Not a stock that you have to monitor and trade with the familiar “buy low – sell high” philosophy.  American Heritage Lending has been positioned well to provide opportunity to families in many neighborhoods.  As an expert in FHA Streamline Refinances we believe that the best advice we can give our clients and their friends and families is to make sure that you take advantage of the positives (low rates, buy vs. rent, etc.) AND take advantage of the negatives (government support of mortgage bonds, better loan programs through the FHA, etc.) while they last.  At some point we’ll look back at these times and say, “I should have…”

Friday, 7 May 2010

Testimonial from Greg

Joel and Justin:

I wanted to thank you both again for all of your help in getting our rate dropped from 7.5% to 5.25%. This will mean a savings of over $350/month for us – definitely a big help.

You were both very professional and extremely accommodating. I am sure glad I called the number on the letter we received in the mail!!!!

If either of you ever find yourselves in Florida, please let me know. I’d love to shake your hand and take you to dinner….

All my best,


Wednesday, 5 May 2010

Testimonial from Gloria

Dear Tim,

You are such a nice person with a good heart. You seem to judge people by their character. God smiles on individuals like you. You trusted me and that says a lot about you. I will send you more clients. Take care and thanks a lot for believing in me.


Gloria Haws