We spend a lot of time with this blog extolling the very real virtues of investing in income properties rather than the stock market. That’s all well and good but what about the people who don’t want to tackle property investing and only want to be able to buy a home at some point in the future? Will it ever be feasible to pursue the American Dream in earnest once again? The Platinum Properties Investor Network’s answer to that is – of course. It’s not here just yet but the time is coming.
We’ll be honest. The short term prospects for home ownership look positively grim. Though interest rates are still low, so are job prospects, and the foreclosure crisis is a another shoe that hasn’t fully hit the floor yet. Add to that increased standards for borrowing instituted by lenders who were burned badly the past few years and you’ve got the makings of a good rental market for a while longer, but keep in mind that the foundations that made home ownership appealing before the recession will still hold true afterward.
All things considered, mortgage interest is still a nice tax deduction and a mortgage, once it’s paid off, offers a legitimate asset that is non-existent for those who choose to rent their whole life. But for the next three years or so, it is a fairly safe assumption that the sub-prime crisis which led to the foreclosure mess will still be reverberating throughout the housing markets.
Once the foreclosure mess begins to clear up, and it will eventually, the factors that traditionally drive housing demand will return: demographics, affordability, employment, psychology, and loan availability. That last one is a biggie. Once the panic has retreated, there’s a good chance lenders will begin to ease up on the current restrictions that make it hard for people to qualify for home loans. Currently, you’d be lucky to find a loan that requires less than 20% down, and your income credentials need to be impeccable. These standards come in a knee-jerk reaction to the deplorable screening that got us into this in the first place. Eventually we’ll find a middle ground that allows deserving people to find a loan that works for their financial situation.
The Creating Wealth Team