In Biblical times, flowing with milk and honey meant very prosperous. If you are unfamiliar with the Bible, that just sounds weird. I mean, I went to HEB (that's our local grocery conglomerate) and the milk aisle was over 50' long with at least six brands of milk and every variation of milk you can imagine... (I am just curious.. SOY? I know some people have to drink that, but...) I digress... the honey aisle... lot's o' choices...
So, America is flowing... why is the economy so crazy? Follow the money, as they say on TV. (Yes, I am a Law and Order fan) Only this time, it has to do with money NOT flowing. The log jam is the institution of lending. Here is how I see it:
Banks lent money to anyone and everyone for about 4 years. If you couldn't qualify, they changed the rules so you could. Everyone was approved. And in typical American fashion, when the poop hit the fan, the pendulum swung way hard the other direction. Lenders now will only lend if you don't need the money. You have to have a 720 score or better to get a face-to-face with a loan officer. After the blood test and the rectal exam, you still might get the loan if you clearly do not need a loan. I even heard of one commercial deal where the Buyer was approved for One Million bucks if they made a deposit of One and a half million into the lending institutions coffers... crazy...
And here we are. Many owners have those creative loans on homes they really couldn't afford. They can't refinance - they don't qualify. So they are stuck. They have to tighten their belts just to stay financially afloat. Others, though not as many as the media would have you believe, simply quit and let the banks foreclose... some do work-arounds or short sales. And of course, savvy buyers are out there snatching up the deals. At least, the buyers who can qualify. And, in a world of tight credit, Cash is king.
On the ground, as a Realtor in San Antonio Texas, I am seeing that prices are pressed down simply by the mentality that every deal should be a fantastic deal. Some very good homes are not selling simply because enough homes in their neighborhood sold cheap, due to foreclosures, or pressure to sell. Relocation companies lower their prices because they simply can't hold onto the homes forever... These are the best of times, these are the worst of times. It all depends if you are buying or selling.
FHA & VA have now stiffened their rules as well: 620 minimum FICO score. And I am seeing many more VA loans then what I had seen in quite some time (I have been helping folks with real estate for over 15 years). But even then, if your score is 620 or higher, prepare yourself for a thorough probing. Wash up.
I have more local info on my site at http:DannyTHomes.com . You can get a Market Snapshot of your home in our area, or if you are buying, set up an auto-search for deals. There is also info on schools, crime, etc.. Take a look. Let me know if I can help.
Until next time - keep your scores up!
