The U.S. government is trying to resurrect real estate values by forcing down interest rates believing cheap money will bring buyers back. Will it work? Should you buy now before prices skyrocket?
The answer to both questions is NO! Here's why:
1) MASSIVE JOB LOSSES. Cheap mortgage money doesn't cause people to buy when they are losing their jobs en masse. In November over a half million people were fired, the biggest one month job loss since 1974. Year to date job losses are nearly two million and more layoffs are being announced by the day.
2) MANY WORKERS HAVE GIVEN UP LOOKING FOR JOBS. Hundreds of thousands of people have dropped out of the labor pool because they can't find work. Add those job losses to the unemployment rate and it hits a staggering 12.5%.
3) SOARING DELINQUENCIES. According to the Mortgage Bankers Association, one in 10 mortgages are now delinquent or in foreclosure. Without massive and immediate U.S. government intervention foreclosures will soar. There will be huge numbers of properties for sale and a small pool of buyers. This will severely drive down prices.
4) BORROWED OUT. In recent years mortgage debt, credit card debt, car loans and other borrowings have gone through the ceiling. With all the payments due, borrowers are scrambling to keep their heads above water and more and more are drowning.
5) LOSS OF LIFE SAVINGS. The stock market crash has claimed a big piece of many people's life savings. And with the government slashing interest rates to create cheap money to lend, savers are seeing their interest rate income fall through the floor, which is especially hard on those people living at least in part on those savings.
6) BANKS ARE TIGHTENING LENDING STANDARDS. With all the foreclosures, credit card defaults, job losses, potential job losses and a Recession that is picking up steam, banks have tightened their lending standards. Unless the goverment relieves them of the risk of NEW loans going bad, those standards will stay tight.
7) FEAR. Wars, potential wars, possible terrorist attacks, out of control U.S. government spending, state and local governments having trouble paying their bills and a collapsing global economy have sent most Americans to the sidelines in fear, uncertainty and doubt.
..........................................................................................................................
If you are facing foreclosure, try to negotiate better terms with your lender and if that fails, and there is no government program to help you, you may lose your home, and I'm sorry for that is very painful.
Your living conditions will be difficult but with time things will get better and you will bounce back. In the meantime, take care of your health. Please see "7 Ways You Can Afford To Protect Your Health," also on this website, http://www.saneramblings.com.
Please also have faith and recognize your life has meaning and you as a spiritual being have value far beyond these problems. Most of us are caught up in this financial failure but the good news is we have each other and together we will solve these colossal issues and learn valuable lessons from them.
Dick
No comments:
Post a Comment