2021 Housing market rumors with Biden
Although there have been no official reports of what President-elect Biden plans for the housing market, there are rumors to be aware of.
Biden has mentioned in a few interviews that he intends to create another stimulus for lower income producing citizens to help become homeowners (just like Clinton did). This program will be designed to cover the down payment for the purchase of a primary home. This will create a chance for first time homebuyers to get a house with no money out of pocket.
NOW, we tried this with Bill Clinton and five years later created the biggest housing crisis in history for the United States. Banks loaned money to anyone with a heartbeat to buy houses 100 percent financed. The banks also created sub-prime loans that ballooned in 5-7 years. Once these loans came due, no one could afford to refinance. None of these people were properly qualified to pay these loans. Others had adjustable rate mortgages that they could barely afford from the start. As soon as the rate went up, they lost their house too.
With much of the United States in a housing shortage during the coronavirus pandemic, prices have over inflated in many areas. If president-elect Biden starts this program, it will create another unreasonable demand on the housing market from buyers that really can’t afford to buy a house any other way. There is little confidence that the banks will restrain themselves from making bad loans again. As before, when the “new” wears off, the stink of foreclosure will cover the country… again.
From a professional real estate prospective, be ready to sell inventory as if your life depended on it. A few years after that, be ready to buy those houses back by the truckloads. Americans seem to think history is boring, until they find themselves making the same mistake twice.
Consumers have to “know thyself” in every aspect, including buying a house. Know your finances. If the mortgage payment is more than 25% of your monthly gross income, be ready to say “no”.
No one will look out for you but you. Know what you are signing when you qualify for a mortgage. Here are some points to remember;
- Adjustable rate mortgages can and do go up, can you afford that if it happens?
- Some banks offer a balloon mortgage, this means sometime in the short future, you will have to pay off the loan and refinance. Make sure your credit score and income stay in good standing.
- Prices are high right now, you may not be able to sell your house later for the same price. Are you able to stay in that house long enough to pay it off?
Remember, these are rumors. Keep an eye on it.