Rates Low and Market Low
August 28th, 2008The San Francisco Chronicle stated in the business section today that rates were the lowest in 4 months-and the Press Democrat in an editorial yesterday that economist have used the term recession regarding next year. Slow economic growth and credit worries are the twin sisters of disaster currently. We are not immune to the effects of a recession for sure but I do not think all is bad in this nmarket. We are back to normal in rates and are using historically valid loan qualifying standards. If the inventory has outstripped the ability of local homebuyers to purchase then the prices need to adjust to the economic reality, however severe it is. In the 1990’s it took a big discount to make this adjustment. There is no guarantee that real estate will always go up and, as homebuying public, need to focus on the home more as a long-term investment and as shelter rather than an answer to an empty retirement plan.
Even Greenspan says he did not anticipate the sub prime loan problems. Sometimes one can be too removed from the problem to be able to clearly recognize it. But recognizing and dealing with it are two different things. When I had my home appraised for loans in 1992 and 1993 there was a 25% drop in value-now that is severe. I was able to take a little money out and I did not plan to sell it. Was it worth $100