The current real estate market may be artificially supported by a system that could collapse if interest rates were to go back to historic levels. Home values could further plummet if continued regulation makes it harder to for the average person to purchase a home. In times of currency-devaluation (where hard assets such as real estate should appreciate) the uncertainty surrounding the political and social situation means it may become increasingly difficult to sell fixed assets which are not portable (blood in the streets).
Let’s examine the situation: real estate appears to be at all-time low interest rates; without Fannie Mae & FHA & the VA there would hardly be this much of a real estate market. There is/are a record number of foreclosures in many areas which are not selling. Mostly, it is the well-financed investor who is able to purchase real property. Wanna-be investors and current property owners with no rental management experience are basically blocked from many opportunities without large cash down-payments. Higher equity positions are required to buy existing properties.
Appraisals continue to be a key problem for many lenders and real estate agents looking to close transactions even if the buyer is financially qualified to guarantee the gap between purchase price and loan value. Many home owners are stuck in their houses and cannot re-finance under the currently low rates due to the massive red tape and low equity situations.
On the other hand – perhaps after years of free-market abuse that has led to this situation, only those who meet the currently increasing governmental/corporate hurdles are best suited to buy homes in this environment? Keep the punch bowl out – but limit who may access it.
Perhaps real estate values will skyrocket along with stocks, equities in 2013, because The FED policy is actually working? We shall see!
… Do you have an opinion? Your comments are appreciated; this forum is now open to reasonable comments.