Real Central VA
Still Trying to Find a Correlation Between the Shift and the Residential Real Estate Market
Posted: 01 Oct 2008 02:00 PM CDT
This letter from John Allison, BB&T’s CEO helps explain my inherent, gut opposition to the bailout (read the whole letter) - PDF here
9. It is extremely unclear how the government will price the problem real estate assets. Priced too low, the real estate markets will be worse off than if the bail did not exist. Priced too high, the taxpayers will take huge losses. Without a market price, how can you rationally determine value?
10. The proposed bankruptcy “cram down” will severely negatively impact mortgage markets and will damage well run institutions. This will provide an incentive for homeowners who are able to pay their mortgages, but have a loss in their house, to take bankruptcy and force losses on banks. (Banks would not have received the gains had the house appreciated.) This will substantially increase the risk in mortgage lending and make mortgage pricing much higher in the future.
Of course, I received this in an email from a friend yesterday -
… if a form of this bill doesn’t fly it won’t matter what happens to real estate prices….nobody will able to get a mortgage anyway.
Read the bill here tell Congress to read the bill first, and see a nifty cartoon here.
We’re all amateur economists now - as a Realtor, I need to figure out how my clients will be/may be affected.
And finally, perhaps my favorite Tweet of the week -
My thought is this - anyone who purports to know what is going on and how to solve the current crisis is either ignorant, delusional, lying or trying to sell you something.
People still need places to live. People still have kids and need more space, still are downsizing, still are moving. The sun is still coming up this morning. Figuring out how we will all be impacted - in as calm, rational and non-panicing manner - is crucial.
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