Changes in the Real Estate Market

Here is a link that gives the statistical basics of what is going on. http://www.creditbloggers.com/2007/03/a_quick_dissect.html

Talking to different mortgage brokers and reading the news, it seems that credit challenged people will not be able to buy very soon if they need 100% financing. The standards for obtaining a loan are going up. Through the last few years I have watched people with very low scores and almost no credit history get homes. This is what helped our boom recently.

Statistics vary but it seems in any given market, the subprime loans are 10% - 20% of the market. Most of these subprime borrowers are moving from rentals to homes. If they are not dislodging the owners who then move to a bigger house, the market could well stall.

The standards will be moving up somewhat quickly. From allowing 580 scores to borrow to 680 for 100% financing. Until the standards do move up, there could be a run in the real estate market as lenders and real estate brokers try to get their clients into homes. It may well be that afterwards they won't be able to get financing.

It seems that there will be some settling and standards might come back down a little until they feel comfortable but the lax policies for borrowers will be gone within 8 months according to some.

Time will tell but here is what I expect at the moment;

Many buyers finding a home quickly.
Within 4-8 weeks, mostly likely a slow market
6 months, standards relax a little and slowly those people learn they can buy.

As more developments happen this can obviously change but I will keep you up to date.