Jim Johnson

Expect Lower Prices Homes for Sale Everett



Posted: Sunday, January 10, 2010

by
Metropolitan Mortgage

6 Reasons Why Housing Prices are Headed Lower



Look for all prices for homes for sale Everett to fall. After 4 months of miniscule gains home prices flattened in October and I expect them to go much lower in 2010. There are many forces working to push down and limit demand while this happens.

1) The number one reason for prices to fall is NO JOBS. What does it take to get through to the idiots we have in Washington DC to see we are heading for a major crash if we don't get folks back to work soon. The real unemployment rate in America is about 22%. Without a job you can't pay your mortgage. If you can't pay your mortgage then you lose your home. If you lose your home it floods the market with distressed homes  called "short sales" selling at lower and lower prices.

2) The shadow inventory of 1.7+ million foreclosed homes not yet on the market. There are 100's of homes for sale Everett that are not on the market yet. These are called REO homes (REO is jargon for the inventory of bank owned homes) and many experts think the banks are holding on to them until the market recovers. Fat chance that it will recover if no one has a job to pay for a mortgage.

3) Mortgage Modification Programs (MMP) are not working. Right now because the federal government is supporting the banks by using TARP money the lenders really don't have a reason to get serious about making the MMP work. And really how fair is it? If I pay my mortgage and my neighbor doesn't. He goes to his lender and gets the lender to lower the mortgage principle (using my tax dollars) and interest rate. Why does he get the break and I don't?

4) Option ARM's are coming due at about 50,000 to 65,000 per month for the next 2 years. These are almost all upside down loans that will face huge increases in payments. With jobs uncertain there is no market to sell these homes. Many of these owners will simply walk away from their homes and leave the keys on the counter.

5) Interest rates will be going up and up soon. I expect mortgage rates to be in the mid 6% range by the end of 2010. As soon as the federal government stops buying mortgage backed securities the current subsided mortgage rates will increase.

6) Expiration of the First Time Home Buyer Credit at the end of April 2010. This credit has been robbing the future sales to bring to the present. It was never large enough to really entice anyone to buy who wasn't going to buy anyway.

I have a simple way to improver the market for homes for sale Everett. Cut business taxes in half. Cut the capital gains tax in half.

Jim Johnson and comments are always welcome.

Everett Mortgage on Line


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