Paul Bishop, economist for the National Association of Realtors, was recently interviewed by the Wall Street Journal about the impact of the housing bill just signed by President Bush and appeared pretty positive in the interview.
He says the new bill will bring stability to Fannie Mae and Freddie Mac which is quite important in my opinion. We learned during the Great Depression how important the stability of financial institutions are to the economy and I guess that’s why many of the policies that originated from this struggle still exist today. On the other hand, the creative and loose lending standards administered by these guys led to the collapse of the financial and real estate markets.
Bishop also feels it’s a positive to provide options for homeowners facing foreclosure. I personally don’t see the economic stimulus in this part of the bill, but I like the fact that they’re lending a helping hand even with my tax dollars.
Probably the coolest part of the bill is the first time home buyer credit which can be up to a $7,500 credit. I wish I had this when I was buying my first home. Either way, it should spur on at least some of the buyers that are sitting on the fence. Right on. There’s a website set up to answer questions on how to qualify for the tax credit at http://www.federalhousingtaxcredit.com/index.html
Finally, Bishop and other famous economists are predicting a bottom half way through 2009. I just can’t figure out why they couldn’t predict our most recent boom or collapse. I can recall so many interviews where they couldn’t see an end in sight so I wouldn’t bet the farm on Bishop’s prediction.
Prices are down to 2004 levels, but prices are still surprisingly up if you look back 8 years. It goes to show ya, real estate is a long term investment. Buyers should look at a home with at least a 5 year time horizon, but preferably 10.