Chicago Real Estate — What the Government’s Bailout means to Chicago’s real estate
Article by michaelrussell56
Everybody is talking about the government’s bailout packages. But how will they affect Chicago real estate. This article discusses Chicago real estate and how the government’s bailout will offer help and hindrance.
Housing is about supply and demand and the government is trying their best to help in both areas. With the Fed buying (A LOT) of US Treasuries bonds they are artifically lowering interest rates on mortgages, which should make housing even more affordable, which should create more demand, but who is buying? The problem is that so many people have been foreclosed or have negotiated short sales and now their credit is so bad they can’t get a mortgage, so the pool of potential buyers is greatly reduced. I also know there are plenty of people that are current on their existing mortgages that would love to take advantage of these lower prices, but can not because either they can not sell their current home or the price they would receive would not be sufficient to payoff their current mortgage.
As for the supply aspect, the government is trying to keep as many people as possible in their homes. Obama’s refinance and loan modification program is definitely a step in the right direction, but is it too late? Probably not, but what happens to the people who just got laid off and can’t find a new job? I believe the government could have a greater impact on the supply side than demand.
The government announced today that they will be purchasing/leveraging up to TRILLION in bad (toxic)assets. There are some interesting aspects of this plan, but I’ll concentrate on the real estate part. Assuming most of these bad assets are foreclosures, the government could play a major role with the supply of homes on the market. I would first take at least 50% of foreclosures currently listed off the market. Then for every 3 foreclosure that sell, put another 2 on the market (I wanted to keep the numbers simple). I believe this would help stabilize prices and balance supply and demand.
About the Author
Michael Russell writes about a variety of subjects. This article discusses Chicago real estate. For more information, visit the Real Estate Book.