Your Exceptional Life

The new housing bill has passed and the President is expected to sign it.  It has some interesting components.   If you asked me a year ago about a $7500 credit for first time buyers, I would have just laughed at you.  $7500 didn’t begin to cover closing costs in Contra Costa County.  It’s a different world today and there are many places out here in the Shadow of Mt. Diablo that might benefit from this tax credit.  It works out to be essentially an interest free loan for 15 years.  This assumes that you stay in the house for 15 years.  We will benefit from the new conforming limits of 115% of the local median.

It doesn’t address the things that really caused the problem in the first place.  I’m not big on fixes.  I’m big on prevention.  The loosy goosy underwriting that went into the loans that became mortgage backed securities was a huge contributor to this problem, as was the designer loan products with teaser rates and huge interest rate adjustments.  These loans which allowed for artificially low payments allowed people to bid up homes to numbers that the property should never have seen.  It was the market then.  Now the market has changed.  I knew a guy who bought in 1991 at the height of the last run up.  He held that house for 8 years while the market worked it’s way back up.  In 2001 he could have sold that property for twice what he paid for it.

The market here will recover.  We have the infrastructure to keep people working.  If we were in an area supported solely by one factory, we could have issues but we aren’t.  We’re in a robust area with diversified business.  We’re feeling this, but we won’t become an dying steel town.