For most people, the failure of Bear Stearns, the reorganization of Fannie Mae and Freddie Mac, the failure of Lehman Brothers,the sale of Merrill Lynch and or the survival of AIG is more than a bit confusing. Wall Street and quasi governmental lending instituitional failures have little resonation here in the heartland, but they should.
Right now, the crisis of confidence in the American financial markets is the overwhelming challenge in Today's New World Of Real Estate.
Selling homes is about one thing: Getting the Money. Right now getting the money is becoming more difficult by the day. Every failure at any magnitude erodes the belief that consumers and investors have in bank liquidity. That makes getting money that much harder for the average consumer. That makes selling homes that much harder. That makes value recovery that much harder. That makes any of us in the business of real estate that much crazier.
Make no mistake: It absolutely affects everyone involved in the real estate business.
While things will stabilize from what they are as this is written, the psychological affect will linger long after the fact and potentially be an instigator in future bank health. How many more will there be? How much tougher will it get in the credit markets because of the newest failure (Lehman)? If AIG fails in the next week what other bad news will that propel into reality?
Essentially it all summarizes what I've been saying for the better part of a year. If you are a seller, you had better price aggressively and get out. We are close to the bottom but there's far too much instability to trust things will improve before mid 2009 and then only in guarded measure. If you're a buyer, the time is right both in value AND in terms of interest rates, now hovering in the upper 5% range which can no longer be taken for granted.
Fasten your seat belts......it's going to be wild ride that's not for the faint of heart.
Questions...Comments....Donations...Greg@GregCooper.com or 317.848.GREG (4734)