Is Buyer Confidence returning in the US?
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I pose this question today as I think the UK will lag the US as it did when we entered into the current house price decline. I think we could be getting close to the bottom across the pond for three reasons:
1) Lower home prices - yes, prices are going down in the US like here and stock levels remain high. However, lower prices are creating buying opportunities which we haven’t seen in several years and a base price is in site.
2) Interest rates are coming down. With lower monthly payments which accompany lower interest rates, homes are quickly becoming more affordable. The major snag of course is that credit is less available. The upside here is the larger deposits and stricter lending terms, reduce the likelihood of future repossessions.
3) There are signs of buyer confidence is returning. Confidence is low right now, but the change to optimism can be quite sudden .
Almost like a cloudy day autumn there will be almost disbelief when we see that almost warm sunshine. When more start buying homes there will be a positive can have a positive effect on consumer and home buyer sentiment.
4) Fannie and Freddie (the twin mortgage buyers) nationalised yesterday. Good news to bring rates for the credit worthy down.
We may not be not out of the woods yet, but i predict the US will lead the charge soon but it could get worse before it gets better. However, we’ll watch sentiment change in the UK remarkably quickly if it changes in the US. What do you think, am I too optimistic here?
Hello, this is Lance Nelson and welcome to my blog, Overseas Property Talk - the authority on investing in overseas property.
Rather too optimistic than too negative, Lance!
Hi Alex, Well it was a tad optimistic in hindsight, what with yesterday’s Lehman Brothers news. The market needs to learn the lesson of over generous lending. And the only way this can work is to allow Banks to go out of business.
My new reason for optimism lies with the price if oil dropping and as far as affodable overseas property is concerned, Egypt looks like one of the best destinations for those of us in the UK who are tired of rain.