The past few weeks we have looked at an overview of the U.S. economy as a whole. Now we will look at what is likely to unfold in the mortgage and real estate markets next year. Then I will go over some opportunities that come up in this stage of the real estate cycle.nnMortgage Markets and CreditnnIt seems the biggest story coming out of 2008 is the Fed\'s announcement in November to buy up $600 billion in unsecured debt and mortgage-backed securities from Fannie and Freddie. The push is an attempt by the Federal Reserve and the Treasury to steer toward lower mortgage rates - not just lower short-term rates.nnWhether the government will be able to accomplish it or not, the idea is to lower the cost and improve the investment of financing a property. The goal is to decrease debt costs to put potential investors or retail buyers with good credit back in the market to stabilize the economy. nnInvestors have always had the role of stabilizing property values after every bust and this cycle is no different. When investors and retail buyers begin to buy up property, values will start to recover which helps the banks\' balance sheets. The good news for loan officers is that the cycle so far has been pretty predictable and we have long been anticipating a new refinance boom that usually comes after federal manipulation.nnReal Estate MarketsnnHere are a few things to look into for Houston. Markets like Houston have been running against the national economic trend, but even in Houston permits are starting to slow. If there is a continued slow-down in housing permits, we may be in it for the long haul. nnLayoffs will be the biggest indicator for Houston for next year. If there are massive job losses then the already fragile market could see a big setback.nnOpportunities for InvestorsnnThe credit crisis has brought fear into markets whose economic fundamentals would not otherwise justify it. Therefore there may never be a better time to buy single family homes in Houston because the emotional fear does not match the fundamentals and prices have fallen below what they would otherwise warrant without the short-term, emotionally-driven fear.nnLastly, with the current credit standards, many buyers (including many investors) are no longer able to get financing for single family homes. Now there is an opportunity for investors with good credit (or those with other financing options) to buy investment real estate at below-market prices.
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