AFFLUENT BUYERS AFFECTED BY FORECLOSURES

04/13/10

In this "D Grade Economy", even the affluent will be affected, according to reports by Realty Trac data. The chart is spiking up, and the numbers are increasing. The two most frequent articles on this subject have been published by THE WALL STREET JOURNAL and INVESTOR CENTRIC BLOG. What does this mean to the real estate industry? Basically, the lack of money or savings, decline in income or just an uneven debt to income ratio plus the uncertainty of the job market and the decline of employment hiring, will be a few of the factors contributing to the default of mortgages and foreclosures. The fundamental principles of an economy are lacking in our D Grade status. The "domino effect" started with the social income status of the "poor" and now to the "rich". Will it have an end? Fortunately, yes. But the inventory will be enormous, and to sell all these properties will take years. Borrowing money today is not an easy task, and the new Good Faith Estimate requirements are more stringent. The interest rates are low and the tax credit incentive will expire on April 30, 2010. What is next? Perhaps, a lowering of the interest rates and an extension of the tax credit for first time home buyers? At this juncture simplification and implementation of new incentives will be the motivators for the new buyers, if you will the "new generation of consumers", by the way more aware of the corruption of "elite capitalism vs. democratic capitalism". Every nation or empire that has tried to manipulate the level of affluency to a selective few has failed.