Thursday, April 28, 2011

March/April 2011 Update from NVAR hits the nail on the head.

An article in the most recent issue of "Update" by the Northern Virginia Association of Realtors hits the nail on the head in regards to our national ecomony: "The revival of housing is essential for sustained economic growth as we head into 2011." by Lisa Sturtevant (George Mason University Ph D assistant research professor) is an insightful look at the role of housing in the nations economic recovery. For the full article please go to:

Briefly, since 1947 the total amount spent on housing (i.e. Total housing expenditures) has accounted for roughly 20% of GDP. What is the Total Housing expenditure % of GDP in 2010 for housing? A mere 2.4%!

How can this be? After all the bailout $$ for banks, foreclosures and shortsales it doesn't seem possible. The truth of the matter is that a significant number of homeowners are still underwater (they owe more than house is worth) and/or they paid more than the house is worth and/or they added improvements far beyond today's market value.

Northern Virginia's real estate market is faring well in relation to the rest of the country. Let's be frank though, it could be doing a whole lot better. Many buyers & sellers are sitting on the fence-

waiting for the momentum to build. Look at this chart on New Housing starts:

What is preventing the housing recovery? Many factors I suppose. The article above does not address these issues. One solid factor that is of great concern to every loan officer, realtor and buyer & seller out there--the often times too conservative direction the loan underwriting standards have taken.

A housing bubble was created when the underwriting standards became absurdly lax.

The reaction to this bubble bursting has been severe by Congress, the banks and mortgage investors. Once again the pendulum is swinging too far in the opposite direction. There are many well qualified buyers out there with excellent credit that want to purchase a home.

Why are they sometimes denied loans? For many reasons is the reality of the situation. Little glitches that push their individual circumstances( or the property itself) off the bell curve if you will. Is loan denial the answer?

If various institutions had not been pressured to make home ownership affordable to all, if mortgage investors had not reduced underwriting standards to practically zilch (low doc, no doc, option arms etc), if banks had not entered the subprime market with reckless abandon would we be at this point today?

Probably not. I believe it is the duty of our government to encourage the banks and mortgage investors to establish reasonable standards of qualification for all ready, willing and well qualified buyers out there so our country can get on with the business of competing in a global economy.

Eventually, the housing market will recover yet why prolong the stagnation by instituting more unreasonableness?

For those in the process of securing a loan I wish you smooth sailing through the process. Home pricing and mortgage interest rates are certainly in your favor...and the dream of the United States will hopefully live on!


Carla Brooks

PS Most photos are courtesy of

PPS If you, or anyone you know is thinking about buying or selling a home call me today for your real estate transaction. I am here to earn your business and your trust and I treat every transaction as if it were my own!

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