The WSJ had a nice piece today on people whom have had their homes foreclosed about 3 years ago, dipping their toes back into the housing market now. There are a huge number of people that had reached too far in terms of how expensive of a home they purchased, or that lost their jobs resulting in them losing their homes. These people now are faced with a choice between renting and buying. Due to rents being higher than buying in many areas across the country the decision becomes somewhat obvious. Currently banks are reluctant to issue new mortgages because of the higher capital requirements that are associated with Dodd Frank, particularly when it comes to FICO’s under 680. If Congress would loosen up those regulations just a bit to promote growth, real estate could come back like gangbusters in my estimation. My fear of tighter regulations is that they will loosened years from now when asset values are higher, as opposed to now when the decision to invest in residential real estate is likely much more sound. Mortgages are an essential ingredient to the housing market in the United States, and if done properly there is no reason why it should be so difficult for employed people to obtain a reasonable mortgage, on a house that they can afford.
INVESTING IN THE FINANCIAL MARKETS INVOLVES RISKS. OPTIONS ARE NOT SUITABLE FOR ALL INVESTORS.