I believe that the best way to correct the real estate market is to change the recipients of all the government assistance being handed out. This goes back to the basic economic concepts that we learned in college: As demand increases and/or supply decreases, we are going to see prices begin to rise. This little event sets of a chain reaction that continues to improve the state of our economy over and over again.
The government needs to be more focused on the demand side of real estate, rather than the supply side, but it gets even more specific than that. We need to start assisting those that are in a position to actually benefit from the assistance they are given, rather than those who are simply going to take the money they are given, and prolong the inevitable. Often times we scoff at the idea of, "helping those who are in a good position to help themselves." Who is more likely to benefit in this situation: the individual who has been foreclosed on in the last year with a thirty thousand loan, or the individual that just needs some help paying for closing costs with a five thousand dollar loan? It may seem heartless, but the person who is close to closing will benefit from the minimal assistance for a much longer period of time than the person who has already been foreclosed upon.
The bottom line is that we need to begin getting as many people into the market as possible, because we need the demand for housing to start increasing. There are literally thousands of people who are primed and ready to dive into home ownership, but cannot because of tight underwriting standards, or because they are a couple thousand dollars short of avoiding mortgage insurance, or paying closing costs. I propose that we move our assistance toward this group of people, because the more people who can buy, the more demand we will have in the real estate market, which will raise prices, improving the equity in all of our homes. The more equity, the more we can borrow, invest, spend, etc.
In closing, I feel as though it is irresponsible of policy makers to focus as much of their time and attention on people who are in no position to be sustained from the assistance that they are being given. In order for the market to correct, we need to assist those that are inches away from home ownership. As for those who are past the point of immediate assistance, their only choice is to wait until they can re-enter the market, and make use of the time they cannot.
Anthony Flores is a real estate, mortgage, and investment consultant in Riverside, Ca. Please check out his work pertaining to the houses for sale in Yorba Linda. Yorba Linda Ca homes continue to remain a cut above the rest, and for good reason.
No comments:
Post a Comment