Prices gains in all markets.
Foreclosure numbers declining steadily.
These are surely signs of a great comeback of real estate.
Or are they?
Pay with a normal income a home mortgage, the homeowner and hurricane insurance, the property taxes, the maintenance expenses; and at the same time manage to keep the total of these payments below a 30% of his monthly pay-stubs ?
Put together an amount sizable enough for a down payment, and all expenses associated with a home purchase?
Manage to arrive to this stage with an almost immaculate credit report ?
Be confident about his present job security and the stability of his income (or the combined income of his couple) ?
Find a suitable property whose seller is willing to accept an offer that is not a "cash with no financing ontingency" deal.
Find a seller that is ready to be very, very patient, because now starts the following point which is:
Get the mortgage loan. As you might suspect, those same banks who were so generous in generating and granting these incredibly easy -and trashy- loans (that they would later resell to unsuspecting investors) are now the most strict, severe, inflexible lenders in the history of the world.
But wait! If it was an apartment in a condominium building, here comes the best. Is your building approved by Fannie Mae? Does your building have too many tenants? Does your building maintain reserves? Does your building have more than a certain percentage of investor owners?
What's funny is that most of these Fannie Mae requirements are addressing problems long gone now, which were precisely originated by the complete lack of ethics and rules in the famous "real estate balloon" years and which do not present a real problem nowadays. The scope of this blog does not allow me to explain why, but it is evident.
Do I have the solution?
In a certain way, if we correct all the above, we'll get it right.
Get normal people back to making a decent income. The ratios that mortgage lenders traditionally established are reasonable as long as they are adapted to reality. Perhaps we should build smaller homes, but it is evident that the national average income in real dollars has gone sharply down in the last thirty years or so.
Get them steady jobs. Bring back the good jobs to America. Good jobs will allow all of us to maintain better credit reports, and by the way send our kids to colleges, feed them better, keep them in better health, educate them better, and make this country's economy roll again.
Keep decency and ethics in the mortgage business, but letting those who got us in the big mess dictate the new rules can be a matter of discussion.
Ranting again! And just because I read the following article today: