Anyone shocked that if you give someone free money that they would buy an asset at a depressed price? Me neither. Especially when you look at the facts that you have to either pay a mortgage or rent a place. So if you are a first time home buyer this is absolutely the best time to buy a house. I don’t know why anyone would have a headline claiming such shock!!!
In my investment area a buyer can pick up a nice foreclosure for 80K. Put under $4,000 down via FHA loan program and get the full 8K tax credit back from the government. Their mortgage payment will be under $500, while it would cost $900+ to rent the place. Now I know there are more costs to owning a home but you can easily see that it has never been better to be a 1st time home buyer. The government basically gives the buyer a FREE asset that lowers their monthly living expenses.
Two questions:
What happens when this government induced demand stops? Do we suffer for 6-12 months because we pulled forward a lot of demand or is the government going to be forced to perpetually extend these programs as a right to insure reelection?
Second where does the market go that is not supported by the government? Do they continue to be depressed until the government throws money at them or does the capitalist impulses of the average American kick in at some point?
The markets have a lot of external forces don’t get caught on the wrong side.
Good Investing
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment