A Bright Side to the Housing Slowdown?
There’s no denying the fact that we’re experiencing a slowdown in the housing market. That’s not up for debate. But here is a question that could be considered:
Might this be a good thing?
Before you cock your head or furrow your brow, allow us to explain. Such an argument would go like this: Due to the soaring prices durign any real estate boom, many (especially young) people, felt an urgency to buy their first home. This pressure may not have led to the best deals, as mortgage such as subprime Florida home loans were commonly applied for and those borrowers are often paying that price now.
Furthermore, capital was misallocated to push construction that wasn’t ready. Now, however, builders and buyers can relax. They can wait until Florida home mortgage demand returns to meet supply.
A slower housing market explained
Similar to the tech bubble, the rapid double-digit annual appreciation in real estate prices couldn’t go on forever. It’s clearly been cause for concern at the Federal Reserve, which helped fuel the boom with its increasingly low short-term interest rates. Now, Chairman Ben Bernanke and his colleagues must be pleased by a cooling of the market. The recent pause or - hopeful end - to rate increases seems well-timed to gauge just how cool it’s become.
Prices may suffer for now, but Toll Brothers Chairman Robert Toll seemed confident last week. He said there’s no recession, long-term Florida mortgage rates remain low, and there’s still demand for housing. In other words: it’s a pretty healthy environment for housing, even if there are price declines still in store.
Investing in Florida real estate?
We hope you have patience. Stocks of home builders such as Toll Brothers and Pulte Homes have suffered severe declines; expectations are so low that they seem good values for patient, risk-tolerant investors willing to wait for the market to stabilize. Some mortgage real estate investment trusts, hard-hit by rising interest rates and fears of an overvalued market, have just begun to tick up.
In some markets, falling prices for condos compared with rents are beginning to make them attractive to yield-oriented investors.
Overall, if you like a house, don’t play the waiting game. It’s too difficult to try and master the market. Go ahead and seek approal on a Florida home mortgage loan, make an offer and don’t think twice about all this talk of a bubble.
