Hank Paulson reads my Phoenix AZ real estate blog
November 25, 2008
I guess someone is listening. Or, at least, someone is reading my Phoenix AZ real estate and Scottsdale AZ real estate blog. Ok, Ok, maybe I am being a little overzealous with my readers. However, to make myself feel better, I will take credit for the following.
Yesterday, I wrote a story disputing a real estate expert who claimed that foreclosures are not the problem facing Phoenix AZ real estate. I argued that foreclosures are the problem because until foreclosure stop dragging down prices, banks will not feel 
comfortable lending.
As a result, dropping prices affecting availability of mortgage rates with reasonable down payments are the problem. Buyers are more and more reluctant to part with down payments averaging more than 10% of purchase price, or more often do not have the cash on hand at all.
Today, the S&P Case-Shiller Home Price national index recorded a 16.6% decline in the third quarter compared with the same period a year ago. According to a news report, “With foreclosures soaring at record rates, the economic picture dimming and job losses ramping up, all the elements were in place to push prices lower.”
This news paints a picture why banks will simply not lend money to (virtually) anyone without 20% down payments (there are exceptions.) The reason being that if home prices continue to drop, homeowners are less willing to pay their mortgage if financial problems arise as the home is worth less then they paid. The can simply , and often do, just walk away from the home. Thus, the banks foreclose on the homes and lose money.
In order to combat the liquidity problem, the Federal Government has made a bold move today and announced,
“The government has introduced a pair of new programs that will provide $800 billion to help unfreeze the market for consumer debt which Treasury Secretary Henry Paulson calls vital to supporting the economy.” Paulson says all “the government programs have been aimed at supporting the lending that is vital to the economy.”
I applauder the move by the FED and am optimistic that the incoming Presidency will continue to do everything in their power to protect banks by insuring loans, thus make mortgage loans available to qualified buyer, supporting purchase and sales of low priced foreclosures, clearing supply of homes and stabilizing Phoenix AZ real estate prices. Once, the bleeding stops, we can build a foundation towards a Phoenix AZ real estate recovery and a national economic recovery.
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Copyright © James Wexler *Hank Paulson reads my Phoenix AZ real estate blog *
If you are listing your home as a short sale in Phoenix Arizona or Scottsdale Arizona make sure you hire an agent who knows how to do short sales and has the experience to get the job done.
Call 480.221.8080 to find out more about Phoenix AZ Short Sales and Scottsdale bank owned homes
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