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Solving the Riddles of the Housing Problem

By Victor Spence

When did the problem started? ? And can we find a solution or an end to this crisis.

Everything started some two to three years ago when individuals began to purchase homes they could not afford. Some were even down right broke. However, some unscrupulous mortgage brokers and lenders approved sub prime and other loans with the hope of making huge profits in the end. But guess what? There is a simple philosophical theory which says any thing done wrong in infancy or at its beginning can not have a successful end or a positive outcome. My grand mother would say” anything gone bad in the morning can’t come out good in the evening”

So “Riddle me this and Riddle that”. We must stick to the core principles of business. Which is and has always been: That is: no one can buy an asset he cannot afford. If we stick to this principle we will have fewer foreclosures now and in the near future.

Banks, lenders and homeowners are now entangled in a web of crisis: banks are trying to save what they don’t have and homeowners are trying to live in asset they don’t own. Hoping that government or the courts will bail them out. So “Riddle me this and Riddle that”, well guess what. He who owns the gold calls the shots. Banks and lenders must now revalue or modify their assets and loan portfolios to current market values. This may mean taking losses or even going out of business. For homeowners who were not coerced or trick into these types of loans: tough luck, you did not abide by the principle of buyer be wary? so bite the bullet and move on.

However, most of us would agree, that no government whether conservatives or liberals can afford to allow the housing sector to stagnate the economy. It is time for those lenders and banks that made those ridiculous decisions to bear the cost for their actions.

Banks and investors with the gold stand ready to buy these toxic assets. They will in turn put people to work and cause the economy to start moving forward once more. So “Riddle me this and Riddle me that” Tom nuh have any money, him cant buy house? Ah ah !!.

For the past 18 months Miami real estate market showed signs of depression as prices were falling and home sales especially the condo market was stagnant. In some areas prices fell by approximately 10-15 per cent. Despite this fact some buyer choose to stay out of the market. They were trying to time the market as foreclosures were at an all time high. By trying to time the market, they may have missed a great opportunty to capitalize on those low prices and sellers incentives.Guess what?. A clear sign that the recovery is here is when real estate investors and venture capitalist and buying up condos and single family homes at bargin prices. The investors are ahead of the curve and the average home buyer missed out on the great bargins. With the Feds approving 700 billion dollars bail-out, lenders will start approving loans. We are aware of tighter credit restrictions and this make it more difficult for those buyers who were time the market.

The housing market is still adjusting and we do not expect to see prices rise as rapid as in previous years. Housing is what is going to stabilize our economy