A Mortgage Crisis Solution to Benefit Home Shoppers and Sellers
I have a suggestion that could provide average Americans with a solution in the face of the Mortgage crisis and a troubled real estate market. (and it contradicts my last article on incentive arbitrage a bit but not in spirit as taking advantage of the incentives to save real money also takes something back to the major builders that have contributed to the problem. We’re talking major price concessions in that article as opposed to some trivial gift like a Technomarine watch or a toaster or DVD player.)
Here’s the solution in 2 parts:
1. Do not buy a new home from a builder.
2. Only buy a home from an actual home owner that has lived in the home.
Now the point of this illustrative solution is to help increase the number of home sale transactions for existing homes, relieving the burden on existing home owners that live there as opposed to helping out the major builders that are partly responsible for the run up in real estate prices, the over supply of new homes, and the past sales tactics that have under priced new homes to sell as compared to existing homes.
Here’s the latest statistics on home sales
A Commerce Dept. report released on Dec. 28 showed U.S. new-home sales plunged 9%, to a 0.647 million unit annual rate in November, from a downwardly revised 0.711 million in October (from 0.728 million previously). Market forecasters had expected a more modest decline to 0.715 million. Following downwardly revised numbers for August and September, new-home sales are stuck in a steep downtrend.
New-home sales dropped by 19.3% in the Northeast, 27.6% in the Midwest, and 6.4% in the South. However, sales increased by 4% in the West. Over the last 12 months, new-home sales nationwide have tumbled by 34.4%, the biggest annual slide since early 1991, and stark evidence of the painful collapse of the once high-flying housing market.
The supply of homes for sale rose to 9.3 months’ worth from 8.8 (revised from 8.5). Whereas earlier sales and price data had suggested big price cuts by homebuilders were clearing inventory, this pattern has been reversed with the November data and revisions.
