Why You Need To Buy A Home, Any Home, NOW — Not Tomorrow, Not Next Year

Now this really sends me out for Happy Pills: my colleague Rob Hahn over at AOL Real estate says we really need to get ready for 20% down payments IF WE ARE LUCKY! Yep, I’ve been having this convo with many housing experts: first of all, the Obama admin really wants to scale down home ownership and encourage people to rent. Of course, this is great psychological PR for the housing market – NOT! (Maybe I ought to just send off a hammer and nails to the White House — go ahead, drive the final nails in the recovery coffin!) The only folks handing out mortgages will be the big 3 (or is it 4?) banks. See, the¬† the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 — don’t even get me started on what I think of the two men behind the name of this “act” — contains a provision authorizing federal regulators to define a “gold standard residential mortgage,” as Rob points out. That would be one where the homeowner has a whole lot of skin the the game.

But Candy, you say, our whole mess today was caused by loosey-goosey lending and those zero down rates. I agree. People are like cattle sometimes and will take anything that looks like a good deal when it’s really not, how else to explain garage sales and why Sam’s is so successful? But then, sometimes you can find real treasure at a garage sale.¬† So why not punish those who promoted the weak lending standards with wimpy underwriting instead of punishing everyone?

Because here’s what’s going to happen: it’s going to be harder than ever for young people to buy their first home. Those of us who own real estate will always have equity to flow from one home to another — less if this bill results in a further deterioration of real estate values. So our kids will have a whale of a time buying a home. How are they going to save up $30,000 for a 20% down payment on a $150,000 home? That’s a lot of money with taxes, car and student loan payments.

Do you see where I’m going with this?

Of course, if this brings down all home values to, say, 1960 rates, they might be getting a $150,000 house for $70,000…