The interesting thing about Real Estate is that it's always moving in one fashion or another. I have found that when Home Sales drop, Leasing rises and vice versa.
Right now, the powers-that-be in Washington D.C. are considering making it a requirement that 20% be put down on all homes that are being financed. If this bill, law, mandate, whatever you want to call it, passes the economic impact on Real Estate will be as follows.
First time home buyers will need to have saved 20% for a down payment alone in addition to any other money they will need to cover closing costs. In Houston, depending on how close you move to the city, a decent home starts around $140k. Saving $28K is no easy task, especially in today's economy. This will reduce the number of first time home buyers - and interestingly, according to Wells Fargo, this is the new sweet spot.
People have to live somewhere, so the only option they have is to either buy or lease. And home sellers will have to either drop their home prices dramatically or become landlords. Either way, if this thing passes through Congress, I anticipate the market demand for lease to go up and the supply of rental properties will not be able to meet the demand.
So, here's your gamble. If you're looking to buy up rental properties for investment purposes and you decide to wait for Congress to decide before doing anything, you can expect to see an increase in asking price for such properties if Congress decides to pass the requirement to put 20% down.
At any rate, it appears as though Congress is making the home finance business an arduous process so I don't expect it to be an easy process to buy a house any time soon.
0 comments:
Post a Comment