Madison Wisconsin Homes and Real Estate: Re-Post of Geithner's Plan to Wind Down Fannie and Freddie

Friday, February 11, 2011

Re-Post of Geithner's Plan to Wind Down Fannie and Freddie

Click here to read ABC News Story on Wind Down of Fannie and Freddie by Tahman Bradley

A multi level story made simple: The 30 year mortgage was made possible by the existence of Fannie and Freddie. Without these massive buyer's of home mortgages, home purchase power will decline for a substantial segment of the American poplulation. A smaller buyer pool will eliminate competition and home values will adjust. Foreclosures will rise as people who have to sell can not sell for what they owe.

Phasing out is not an effective option because the period of uncertainty will effectively halt today's buyers from making commitments. This is the next phase in adjusting the real estate economy in the United States.

Adjustable rate mortgages and 10 year mortgages make wise economic sense. In the short term there will be pain. In the long term, the shift is reasonable.

No comments:

Post a Comment

If Not Sold in the First 30 Days, Successful Sellers Conceded The Price

Through Mid-September, thirty seven percent (37%) of 126 home owners who sold in 2010 sold without making a single price concession. They typically attracted a buyer within 40 days of going on to the market. These successful owners conceded little on price as they sold for about 97%-98% of asking price.

Those who counted time on the market by months or even quarters eventually sold for an average of 91% of their initial asking price. Price reductions improved their success opportunity. Once their price was reduced to a price favorable to a buyer, the time on the market was short--about 34 days from last price change to accepted offer.

See September 20, Buyer Enticing Pricing

Disclosure

The source of data: South Central WI MLS Type of data: Single family homes and maybe condos and maybe other Areas: Madison and other areas such as McFarland, Shorewood Hills, Middleton, Maple Bluff, Oregon, DeForest, Cross Plains, Dane County, Fitchburg, Verona, did I say Middleton? Dates covered in these blog posts: January 2010 and continuing.

All comments are the relatively well thought out opinions of Tom Meyer. Those opinions are not necessarily shared by Restaino & Associates, other brokers, or the national, local, or state associations of Realtors... in fact, they may be significantly different.