Good News for California Housing
August 23rd, 2008 categories: Our Market
According to an editorial in the Los Angeles Times on August 20, a glimmer of hope is on the horizon for California’s economy due to improvement in the housing sector. Home sales were 14 percent higher in July 2008 than the same month in the previous year and foreclosures were down 8 percent from the previous month. The sales statistic equates to the first year over year increase for California as a whole in almost three years.
This is very good news indeed for our overall economy as housing plays such an important role and touches so many sectors including professional services, retail sales and manufacturing. Consumer confidence also is greatly effected by the health of our housing market. When people see equity growing in their homes, usually their largest and most profitable investment, we feel secure and free to spend more of our disposable income. The converse is also true; when we watch our equity shrink and credit dry up, we tend to react with conservatism, the effects of which are very evident today in retail and commercial markets.
Looking for a bright side? It’s a great time to get a great deal on just about anything. If you’re shopping for a new car today, you’ll find a very receptive sales manager whose willing to work out a super deal just for you and take some pretty unlikely collateral as trade in as well. Since when does the Toyota dealership sell Harley Davidson motorcycles? They do today! So, if you do your homework and research the competition, and are willing to wait (a couple of minutes) for reality to set in with the seller, you just might get the deal of the decade.
More bright news on the horizon just may be some much needed legislation to help us avoid this credit debacle in the future. A modified version of AB 1830 by Assemblyman Ted Lieu (D-Torrance) would bar pick-a-payment loans to subprime borrowers, limit the size and duration of pre-payment penalties on subprime loans and prohibit brokers from steering subprime borrowers into costlier loans than they qualify for. Taking aim at the financial incentives behind predatory subprime lending, it would forbid lenders to pay brokers more when they persuade people to take loans with pre-payment penalties or higher interest rates. And it would require mortgage brokers to place their customers’ financial interests ahead of their own– a provision that would apply to prime and subprime borrowers alike. Can you legislate morality? Shouldn’t that be a given anytime a licensed professional offers his or her services to a client? Finally, it would let California regulators enforce federal lending laws as well as state rules, while giving the victims of predatory lending more access to courts.
Some say the bill doesn’t go far enough but it is a good step in the right direction. Too bad so many had to pay the price for the greed and poor judgement perpetrated to date and had to pay with their credit ratings and in many cases, their homes and dreams. Let’s hope this is a lesson for future professionals in this industry and in fact, professionals of all sectors– long term perspective is paramount to the success of our economy and indeed to our success as a society. We should have learned the lessons of short-sightedness by now, understanding that lack of vision and integrity will always deliver unsatisfactory results. Let’s hope our new leaders will act rather than react and base their decisions for our country on sound, long-term perspectives. Now that would be a change for the better.
Hello.
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thank you.