The Sky is not Falling
It was nice to see a couple of stories this week, both local and national in scope, injecting some reality into the so-called housing “crisis”. Turns out the sky is not falling after all.
Rich Levin’s Sensationalism and the Housing Bubble piece on BrokerAgentNews.com took some shots at the National Association of Business Economists for saying the credit crunch was a bigger threat than terrorism. Yikes.
I appreciated his rather succinct description of the current sub-prime mess: Secondary market lenders allowed a foolish combination of underwriting standards allowing buyers to have both little or no down payment and marginal credit.
He went on to say that while there are some local real estate bubbles, for most communities in this country, everything is pretty normal. Prices are appreciating a little slower but still appreciating. Houses are on the market longer. Buyers have more choices so they can be pickier.
Locally, The Spokesman-Review ran a front page story, Spokane dodging subprime problems for now indicating our strong regional economy has helped to avert the “meltdown” experienced in other areas. With no stats to follow, lenders and economists hedged on the extent of local exposure to subprime loans, but agreed that it is far less than in some of the bubble areas like California and Florida.
In 2008, many adjustable loans will increase from introductory rates, so now is the time to review and possibly refinance with better terms. Props to Tom Flanigan, branch manager and mortgage consultant for Golf Savings Bank, for recommending that homeowners with adjustable loans “call a local Realtor and ask for a local mortgage reference rather than trying to find a loan product on the Internet.”
Like most of my colleagues, I think the changes in the mortgage industry are a healthy correction. However, it may take some time to work out the kinks as underwriting standards are tightened. If you’re in the market to buy right now, it’s a good idea to allow some extra time for your home loan to close, and don’t be surprised if you are asked to provide additional documentation at closing time.
Real estate will always be local in nature. As I said in a previous post, the Spokane market is enviable in comparison to the nation. The Seattle Times recently ran a story touting Washington State among the best in home appreciation. Based on a report from the Office of Federal Housing Enterprise Oversight, Washington State had five cities that ranked in the top 20 for appreciation, with Spokane coming in at number 20. Not too shabby!