Economic Stimulus Package Could Bring Big Benefits For Real Estate Sector

If you tuned into CNN, Fox News or any of the other major news media outlets this week, you likely watched the drama unfold regarding the new Economic Stimulus Package which is currently making its way through the Senate. This controversial package has many speculating as to its legitimacy but is being driven by President Obama in an effort to jump-start our ailing economy.

To learn more about the status of the Economic Stimulus Package, click here: http://www.reuters.com/article/politicsNews/idUSTRE5136U320090204?virtualBrandChannel=10112

As of now, the Economic Stimulus bill is winding its way through the U.S. government, pushed by Demographic leaders who want to present President Obama with legislation he can sign by-mid February.

From a real estate perspective one of the biggest potential benefits of this Economic Stimulus Plan is special Amendment #353 to the Plan, a provision for the Federal Government to buy-down mortgage rates to 4.5% or less for a 30-year fixed rate loan for the purchase of a primary resident. Without question, a 4.5% or lower, 30-year fixed rate mortgage would help stimulate housing sales and would also open the door to hundreds of thousands of new potential buyers by greatly improving housing affordability.

While the Economic Stimulus Package makes its way through Washington, real estate sales continue to show new signs of life. Just this week, NAR released its pending home sales report noting that pending home sales rose 6.3 percent nationally to 87.7 from an upwardly revised reading of 82.5 in November and is 2.1 percent higher than December 2007 when it was 85.9.

Also noteworthy this week was an article I came across on Reuters.com (http://www.reuters.com/article/newsOne/idUSTRE5140H420090205) which points out that housing markets across the country may be nearing bottom and we should begin to see signs of new life by the 4th quarter of this year. Among the highlights of the article:

"More than three years since the market began correcting, inventories are flattening, prices are coming back down to earth, and sales are approaching stability," the report said.
“The outlook, however, assumes stronger action by U.S. policymakers and says that even with further government intervention, the recession will keep the housing market from fully recovering until the end of this year.”
“With this help, sales are probably at bottom, stabilized by foreclosure sales, while construction will hit bottom in the first half of this year, although the pace of housing starts will remain very depressed until 2011.”
The coming week will likely be an interesting one in Washington, D.C. as lawmakers make the final decisions on the Economic Stimulus Package. It will be exciting to see the details unfold and the plan take shape as lawmakers work to quickly restore our ailing economy.

Locally, we’re seeing some interesting trends. As we continue to work through our bank owned properties, it is a welcome sight to finally see banks responding to short sale offers. Couple that with the fact that with interest rates so low, buyers—especially first time home buyers and some investors—are finally beginning to feel the need to come off the fence and take action. The hardest hit markets are new construction and the upper end. Both are nearly at a stand still though as prices begin to stabilize and we finally weed through the bank owned properties (later this year), we should begin to see a domino effect that ultimately benefits all price ranges.