Sunday, October 05, 2008

What is the Impact on Real Estate Post-Bailout?


Fannie Mae (FNMA) and Freddie Mac (FHLMC) are no longer with us as the federal government has taken them over under the Economic Stability Act.

Lawerence Yun, Chief Economist for the National Assoication of REALTORS (NAR) has made some predictions. He says, "First of all, it is likely that mortgage rates will trend down over the short run. But how much of a decline will depend on how actively the government...loosens the mortgage liquidity spigot."

Replacing Fannie and Freddie is the newly formed Federal Housing Finance Agency (FHFA) who has the authority to purchase mortgages. "This will help drive down mortgage rates," says Yun. "That is good for the housing market."
Yun expects the lower mortgage rates will slow the level of defaults in housing and lower rates will return buyer demand to the housing markets, thus lowering housing inventory.

Our prediction is that this should start us over the next two years to a return to a more normal and stable housing market.

For more information go the NAR website.

See our website.