As congress debated the Wall Street bailout, there seemed to be an underlying assumption that some kind of package was necessary to put liquidity back into the mortgage lending industry. The general impression is that tougher lending standards have made mortgages scarce, and indeed, the number of existing home sales continued to slip in August. Taken at face value, these stories might be enough to scare potential home buyers out of the market, at least long enough for the bailout package to kick in. However, before heading to the sidelines, those potential home buyers would do well to ask two key questions:

• Are new mortgages really that scarce?
• Will things be better or worse once government rescue efforts take hold?

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Mortgage rates and housing prices run on different cycles, but they are somewhat related. However, coordination between the two cycles got somewhat out of synch over the past week:

• Mortage rates broke out of their month-long holding pattern and edged upward
• New home sales declined by 13.3% for the year ending March, 2008
• Existing home sales declined by an even faster rate for the same period

From a potential home buyer’s perspective, it has been possible to sit back over the past year and watch prices steadily get cheaper. However, the tick up in mortgage rates could signal a call to action — it might be best not to wait too long before getting a mortgage.

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Being bombarded by the constant (and mostly negative) news on the mortgage industry, many of us are viewing home purchase as a topic not for discussion; however, that approach may not be right for everyone.

The housing market has changed throughout the nation and some areas have been significantly more impacted than others. These fluctuations, on the other hand, have opened up potential opportunities to some buyers who are able to take advantage of the lower housing prices, decreased demand, and their fairly good credit score.

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Custom stone counter tops. Professional grade stainless steel appliances. High end bath renovations worthy of a five star spa. Although luxurious upgrades appeal to homeowners, the surplus of homes on the market has changed the focus of many buyers, who seem less impressed with high end features than in recent years.

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The National Association of Realtors (NAR) reports that the median price of a single family home has fallen to $198,700. Real estate professionals estimate that there is approximately a 10 month supply of homes on the market. Lower home prices and a glut of available homes suggest a buyer’s market in many areas. This can provide homebuyers with more negotiating power.

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Yesterday, the Chicago Tribune published an article entitled Sunny Sign in Home Resales that highlights the recent rise in existing home sales reported for November. As the article reported, the increase came as a surprise to experts. Why is this? Frankly, it’s because many of the experts have been overly “doom and gloom” in their outlook these last few months. Predictions of mayhem have been ringing in the air for so long that even good news such as this, supported by non-disputed sales figures, is still dismissed by half the experts, who can’t explain it, but still claim they’re not convinced we are on the road to recovery. What follows will shed some light on the reasons why some people aren’t ready to admit that the current situation isn’t as bad as they’ve been projecting.

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