Real Estate Cautiously Responding To Government Plan

The real estate is not over enthusiastic about government plan and is responding cautiously.

Realtor Valerie Morrill hosted an open house but only three potential buyers knocked. A year ago about 10 to 15 persons had walked in midtown area, Kansas City. She does not deny that the government measures will help but right now there are no signs of excitement in the market. There are too few buyers. A year and a half ago one could buy a house with only $500 in the pocket. But now all the tempting rates and programmes have vanished. Buyers have to put down 10% down payment. One has to have ready money to own a house. “Nobody has money,” she lamented.

Despite the Bush administration’s dramatic $700 billion plan to bail out the financial industry it is not doing much to make lending easy so that more buyers would be able to get loans. Neither has the plan reduced mortgage interests.

The government plans to buy en masse mortgages from banks and other lenders. By doing so the government will be empowered to stop the flood of foreclosures and help to keep people in the houses that are their homes. This will halt the tumble in real estate prices. But how fast can this plan come into effect? Over 4 million houses are in the pre-foreclosure stage having defaulted for over a month on their loans by the end of June this year. Foreclosure proceedings have been initiated against 500,000 borrowers according to Mortgage Bankers Association.

Some localities in California are particularly affected by a surfeit of vacant foreclosed houses. Joe Minnis of Prudential California recalls how empty houses are being regularly stripped of all fittings, fixtures and appliances in San Bernardino. Gangs are merrily operating with impunity. In desperation the neighbours are in turn parking their vehicles on the driveways of these vacant houses so as to keep up appearances of the houses being occupied.

Minnis too held an open house representing a bank that is eager to sell off huge numbers of foreclosed houses Minnis was happy with the number of people that responded last Saturday. The Dow Jones fall had made people jittery but the government move seems to have restored some amount of confidence. But this does not always translate into realities of actual deals and transactions. Numerous practical problems turn up – the most important being that many are not qualified to avail of help.

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