Bullish Housing Signals?
“I’ve never seen the president so excited about housing” That’s what Collingwood’s Chairman, Tim Rood told CNBC’s Mandy Drury and Tyler Matheson on Street signs yesterday. Rood’s comments were referring to President Obama’s announcement yesterday that FHA will reduce its annual FHA mortgage insurance premiums by 50 basis points which will save new borrowers an average of $900 annually. “Listening to the president’s speech I couldn’t tell if it was Bill Clinton, or George W. Bush but I can tell you the American dream is back,” he added.
When asked if now is a good time to invest in real estate, Rood mentioned, “Certainly now is a fantastic time to buy, values are still down off of the historic highs, rates are unprecedented.” Rood was joined by Auction.com’s Rick Sharga who said, “There’s never been a better time to buy a house if you have cash and you are one of the fortunate few that can actually get financing. Interest rates are at historic lows, home prices haven’t fully recovered from the boom and bust cycle, institutional investors are backing out a little bit and frankly, this time of year there is just less buying competition and sellers tend to be more willing to negotiate. So, it’s a really good time to buy a house right now.”
Drury alluded to some concerns about the degree to which reducing the FHA mortgage insurance premium is introducing a new level of risk. Rood responded that he is, “certainly of the mind that anything you can do to remove the economic barriers to homeownership for, as the president said, responsible borrowers is great. It’s really only the last legitimate wealth creation opportunity for most Americans.” He added that, “As it relates to the government taking on more credit risk, we look back at the housing crisis and think ‘man, we don’t want history to repeat itself’ but don’t forget, back then the GSEs, Fannie Mae and Freddie Mac and FHA had about a 45% market share, now they’ve got like a 95% market share. So while I think it’s good, we better be doing this with eyes wide open.”
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