We are in some scary instances appropriate now but also thrilling instances as we are living in a historic moment. How we deal with this fragility in our scenario will dictate policy that impacts all Americans for generations to come.

Significantly of what we hear in the news about the housing marketplace creating a comeback is not correct. More than the past 12 months I’ve observed stories claiming that several areas have seen housing sales increase and residence rates have been inching up. Whilst this could be true the numbers are getting doctored let me clarify. Final year in the USA there were a total of about five.five million foreclosures. So far this year Bank of America alone has over 5 million foreclosures, this figure does not account for Wells Fargo, Chase, Citibank or any other lending institution.

The banks are holding on to inventory and in some cases are renting homes back to the parties that have been foreclosed on. Really should the banks flood the industry with this inventory what do you think will take place to the residence rates across Texas and the rest of USA? You guessed it the housing market which is the largest indicator of how an economic climate is doing would totally collapse and property rates would plummet. Immediately, this situation is killing the refinance marketplace since banks are going with the most conservative appraisal approach when approving refinances. Just in the past 6 months I have lost a number of refinance offers due to appraisals coming in lower than market place worth. However we are not having the very same matter with purchases as banks want to get rid of inventory.

What’s the flip side? I do see a possibility of recovery. In a previous post I noted that during the mortgage and true estate boom we saw rental rates go down and mortgage rate along with home rates go up. Which meant it was far more costly per month to buy a property than it was to rent. That trend has now reversed, we will be seeing house costs continue to drop and mortgage rates will remain very low (unless hyper-inflation occurs) for at least two-five years. Rental rates are skyrocketing so now it is less high-priced per month to purchase a property than it is to rent.

This reversal, in my opinion is what will get us out of our existing situation and help in the reset of our economic climate. Assuming our congress gets their act together the recovery mentioned above has a high probability if not, hyper-inflation will occur and we could be screwed for a long time to come. I don’t know about you but I’m crossing my fingers and hoping for very best in this historic moment in time.