Last day at Real Estate Connect the 2010 version finished with some of the new tech award finalists who had a only a couple days to create some new useful tools but then things got more interesting (depending on one’s POV) with the talk of the Housing Market. We sat in on Sean O’Toole CEO of ForeclosureRadar.com and Dale Stinton CEO of National Association of REALTORS who discussed the Big Housing Lie. That lie chatter dealt with the rise of real estate values.
Much of the talk circled around the increase in value of homes that he attributed is in terms of lending styles and inflation. A six percent rise in values may be attributed to inflation (about 3.9 percent) and the remaining increase could be credited to new lending products. The G.I. Bill introduced in the 40’s led to an increase in the price of homes. Same with the creation of Freddie and Fannie, which caused the increase in prices. How about the 80’s with adjustable rate mortgages that led to price jumps? Of course with the recent price bubble consumers had the taxpayer relief act, Fed dropping rates, sub prime and neg am loans. All of these rises led to price drops or “corrections.”
Tie those ideas in with the notion that the banks and your mortgage lender tell you to “Buy as much as your banker said that you can afford.” Think about how lending styles have determined the rise of home price rise along with inflation. Has the government has been in cahoots with banks and real estate values?
Real estate can be used as an inflation hedge but is it a good investment? Is this a case of Monday morning quarterbacking? Can we all just blame the banks for completely irresponsible lending practices?
Talk amongst yourselves and see you at the next Connect.