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The Federal Budget 2009 introduced several incentives to get the first time home buyer feeling all fuzzy about taking the plunge. If you ask me these incentives don’t amount to a hill of beans and will have zero affect. There is nothing in these government measures likely to persuade Buyers to pull the trigger. Makes me wonder if the people that wrote this budget understand the reasons buyers make decisions? This is nickel and dime silliness not well thought out and will only flush more taxpayer money down the drain.

Do you remember the early 80′s stimulus package? If I recall correctly it offered Buyers a $3,000 dollar grant and a $5,000 dollar forgivable loan (or was it the other way around)? Regardless it was a much better attempt, and some would call this recession worse than then. The de-leveraging from worldwide overcapacity has caused a lengthy speculative bubble and it will probably take a few years to correct. Our real estate markets are bloated with inventory, paralyzed by bad news and clogged with overpriced listings. The patient at this moment is hemorrhaging on the operating table but you can be assured they will do anything and everything to resuscitate this poor deflating patient; I have watched them do it twice before during my real estate career. Simply handing people money to spend is not the solution. Jobs and hopes instill positive expectations and give Buyers confidence and security to act.

Having witnessed the first two recessions come and go I am confident this one shall pass too and there will be buying opportunities for those that step up to the plate. There are investors / Buyers out there right this minute rubbing their hands together in glee. It’s a rare sales event they don’t want to miss. The Baron Rothchild had two sayings; “Buy too soon; sell too soon”, and “Buy when the blood is running in the streets”.

Even though I think it’s still early in this big sales event I have seen good deals out there in the past weeks. I was involved in a distress sale on a detached 2 story home which was scooped up for $110,000. The Buyer says this rental property when reconfigured will be capable of generating $1,500 a month or more. The other was a power of sale; a large executive home in very prime location selling for what I thought was well below replacement cost. There were multiple offers on this property when it sold.

The one no brainer to remember in this market is dirt cheap mortgage money. A few of my past blogs have focused on these shock and awe rates. Currently 5yr closed for 3.5% and 3yr. variable 2.75%.

Lower prices, more houses to choose from and dirt cheap mortgage money – now that is stimulus! Of course, cheap deals can always get cheaper, but for the long-term first time buyer this may provide an excellent entry point. A silver lining in the housing market that should not be overlooked is housing affordability. Lower prices and lower carrying costs will eventually raise expectations of improvement in the market.

Some Famous Quotes:

Donald Trump: “It’s tangible, it’s solid, it’s beautiful. It’s artistic, from my standpoint, and I just love real estate”.

Warren Buffett: “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful”.

Sarah Beeny: “Don’t stretch yourself too much with a mortgage. Buy within your means.. it’s not worth the sleepless nights”.

Suze Orman: “Owning a home is a keystone of wealth… both financial affluence and emotional security”.

Donald Trump: “I bought properties inexpensively and made a lot of money. I began to think it was easy”.

***Cheers, HAPPY SPRING!

Tom.

Call me direct: 705-328-5424

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