Getting the boom going again in Texas and California

So what do you do when house prices are slowly dropping and demand has stagnated? Create more demand! According to this article on MSNBC there’s a proposal in the states to change the way that credit scores are calculated to enable those that lack social security numbers or legal status as US citizens to get mortgages based on evaluating a prospective client’s utility bills, rent checks and other payments.

Should the new reporting methods gain wider acceptance on Wall Street and among secondary mortgage lenders like Fannie Mae, housing markets in places like California’s Central Valley would stand to gain the most, the National Association of Hispanic Real Estate Professionals said.

“Gateway states like California and Texas will disproportionately benefit from the housing boom because so many of their residents are immigrants,” said Gary Acosta, the association’s co-founder, speaking from the group’s annual convention in Las Vegas. “Boosting home ownership among these populations is a positive contribution to the overall fabric of our society and our economy.”

So with the current slowdown here, where can we turn to get more demand? Zero percent down and 35 year mortgages don’t seem to be doing it.

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dingus
dingus
13 years ago

"but what if the standards change permanantly"Absolutely. Could be a new paradigm. Maybe this time it really IS different. Power of positive thinking!

d_oush
d_oush
13 years ago

What you seem to be suggesting is that by grading the exam easier, everyone could be above average.Not at all, this isn't a test, its home ownership. Its the american dream. All a responsible owner needs to do is meet their bills not get a degree in engineering.Affordability declines, the market favours those who are willing to shoulder increased debt and risk. And as credit standards are relaxed, many of those are making bad and unsustainable decisions.Thats up to the lender to determine, but what if the standards change permanantly. You may say that affordability declines, but really with lower interest rates people can get loans for larger amounts, so those larger amounts are more affordable, meaning that prices can at least stay where they are even if they have to wait for first time buyers to catch up.

dingus
dingus
13 years ago

"Why shouldn't more people get the chance to buy their own homes? Its only reasonable to relax credit requirements enough that the majority of a population can become owners."Semper fi, dude. I'll bite. What you seem to be suggesting is that by grading the exam easier, everyone could be above average.Did I miss the part over the past few years where the problem was identified as insufficient demand for housing? All the loosening of standards does is create more money chasing the same amount of supply, which pushes prices up. (My 5 year old understands this. CMHC seems not to — though if your existence was premised on ignoring simple truths, I guess you would too). Affordability declines, the market favours those who are willing to shoulder increased debt and risk. And as credit standards are relaxed, many of those… Read more »

WoodenHorse
WoodenHorse
13 years ago

d_oush:Go to Ben Jones' site: <a href="http://www.thehousingbubbleblog.comwww.thehousingbubbleblog.com<br />Watch it for a couple of days….You'll see plenty of information on the explosion of foreclosure proceedings in the US

Anonymous
Anonymous
13 years ago

Well, if the Americans are looking south to re-inflate their bubble, maybe we should look west… to the Far East. I mean, just stick an ad in the Beijing Daily Planet or whatever "No money down, heirloom-style mortgage, no citizenship required…" and get out of the way.

d_oush
d_oush
13 years ago

Why shouldn't more people get the chance to buy their own homes? Its only reasonable to relax credit requirements enough that the majority of a population can become owners.As far as foreclosures go, where do you get your info? I don't think thats the case at all.

ken
ken
13 years ago

Is relaxing the credit standards really a good idea right now? Aren't there a record number of foreclosures going on in a lot of states?