2014 Housing Changes and Predictions

2014 Housing Changes and Predictions:

New lending rules will limit the number of working class buyers. By now, you have likely heard of the new mortgage rules that are going into effect January 1, 2014. As you know, the people who put these rules in place (Congress via HUD) believe these new guidelines provide greater consumer protections and will prevent a similar collapse we had in 2007.

The truth of the matter is, when a lender originates a mortgage that they are going to resell to Fannie or Freddie, the lender will have to raise their lending standards before they can approve the loan. As you can imagine, advocates for “affordable housing” are looking at these higher standards and having a fit. They don’t like these new standards because essentially, it begins limiting loans to high risk buyers with standards they aren’t going to be able to meet.

Regardless of what side you fall on in the Realolitical discussion (Realolitical = Realestate + Political) of affordable housing vs. stricter lending, the end result is fewer working class buyers in 2014 than we have had any time after the 2007 collapse.  

Unemployment is predicted to remain at about 8% for 2014. The CBO (Congressional Budget Office) is a bit pessimistic for 2014 when it comes to unemployment. They are expecting unemployment to remain around 8% which means employment conditions will likely remain the same. This means that if we take a look at the hard number, we should be seeing about 300,000+ jobless claims weekly for all of 2014. This number will change according to seasonal work requirements but, essentially, 300K jobless claims weekly.

Long terms jobless benefits have not be renewed for 2014. Approximately 1 million people this week will NOT get their jobless benefits. These people will be forced to get creative with making ends meet. For many, the risk of foreclosure just became more real than it ever has been in the past. Right now, Congress is in heated debate about extending long term jobless benefits and it might get passed however, it may not happen in time to save many from foreclosure as Congress debates.

Approximately 52% of the American public are on the Government roll. In other words, the majority of Americans are surviving by taking the tax payments of the working public. This begins a paradigm shift in our country that will be very hard to stop. In fact, it makes our country more like Europe than we have ever been before. NOTE: France’s President this week won a legal victory which will see both individuals and companies that make more than 1 million dollars, pay 75% tax rate on that income for the next 2 years. So, in essence, if you make 1 million dollars, you will pay $750,000.00 of that to the government to pay your fair share in taxes. The really sad part is, even with this tax rate, it doesn’t even put a dent in France’s debt….they are still at serious risk of insolvency.  

The bullish stock market will come to a grinding halt. In 2013, the Federal Reserve announced it will begin tapering off it’s Quantitative Easing bond purchasing program in 2014. Now, this is a very complicated monetary policy to explain but, essentially, it means that the Federal Reserve is going to stop printing money in order to stem off inflation concerns. Essentially, the Federal Reserve believes that too many dollars are in the system and in order to prevent out of control inflation, they need to pull back. Many analysis agree that the Quantitative Easing program is the lynch pin in the stock markets bull market for the past 2-3 years. Some are concerned that, without the Federal Reserve pumping money into the market….the market will collapse because our economy isn’t as strong as they thing it is. In other words, the Federal Reserve seems to be drinking the White House’s political kool-aid. The scary part of all of this, foreign countries are beginning to sell off their dollars. By doing so, our dollar weakens and inflation begins to get serious.

Finally Obamacare destroys the insurance industry and millions find out they are going to pay more for insurance than they ever had before. Sure, Obamacare advocates like to tell people that 2 million people signed up however, what they fail to tell you is that more than half of those are either 100% tax payer subsidized or a percentage thereof. They also forget to tell you that nearly 6 million lost their insurance in November and December of 2013 due to the new minimum insurance standards and that 30-40 million are at risk of losing their insurance once the employer mandate goes into effect. Everyone knows Obamacare isn’t financially solvent and the fact the law is raising premium for both individuals and employers, it’s believed that many will simply lose coverage or end up paying inflated prices they can’t afford.

So….add it all up and I do believe that in 2014, we will see absolutely no positive change for the real estate industry. If anything, we will see our industry grow stagnant and in some areas of the country, see increased inventories, lower prices and increases in short sales and REOs. I do believe high demand micro markets that aren’t over developed will be little safe havens but, unfortunately not enough of those exist to prop up the real estate market as a whole.

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Jesse Gonzalez is a highly accomplished and respected real estate professional with a wealth of experience in the industry. With a career over 15 years, Jesse has established himself as a leading real estate sales and marketing expert.

As a licensed real estate agent since 2005 and a broker since 2008, Jesse has a comprehensive understanding of the complexities of the market. In 2013, he founded his firm, Liberty House Realty, LLC demonstrating his entrepreneurial spirit and commitment to delivering exceptional service to his clients.

Jesse's expertise extends beyond traditional real estate transactions. He obtained his Registered Appraisal Trainee in 2019, providing him with valuable insights into property valuation and market analysis. Although he decided to focus primarily on sales, his appraisal background gives him a unique advantage in understanding the intricacies of property values and trends.

With a dedication to excellence, Jesse consistently achieves outstanding results for his clients. Last year alone, he closed over $20 million in sales and received the prestigious Sapphire Award from his local association, recognizing his exceptional achievements in the industry.

Beyond his successful career in real estate, Jesse is passionate about education and personal growth. He is completing his undergraduate degree in Forensic Psychology, with plans to attend Law School in the fall of 2024. Jesse's ambition is to become a real estate litigator, focusing on real estate consumer protection law and advocating for the rights and interests of homebuyers and sellers.

As the owner/operator of the nation's largest social network for REO professionals, <a href="http://www.REOProNetwork.com">www.REOProNetwork.com</a>, Jesse has positioned himself as a thought leader and industry influencer. Through this platform, he fosters collaboration and knowledge-sharing among REO agents, attorneys, asset management firms, and other professionals in the field.

With a commitment to professionalism, integrity, and providing a personalized experience for his clients, Jesse Gonzalez is a trusted advisor and a driving force in the real estate industry. Whether assisting clients with buying or selling properties, he consistently goes above and beyond to exceed expectations and ensure successful outcomes.

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Comments

  • Great article,on point well said!!

  • Oh they are STUCK Jesse. QE is what created the false perception of a recovery and now it is out of control. @ choices: 1. Ease now and deal with the fall as it is 2: Continue with QE and keep building up the false recovery built and set us up for an even greater fall. I predict the Janet Yellen comes in and stops easing for fear of "looking bad" and scaring consumers. We are most definitely in for a greater fall than we have seen. They cannot keep implementing hyper-inflationary tactics and expect capitalism to create the fundamentally sound recovery that it is capable of without interference. Hey, good for REO agents. Already on our fourth straight consecutive month for sale increases.

  • I guess today is the bad news day. Did anyone see this news story making the rounds on Facebook? It's the candid response of some workers getting told how their benefits are going to be effected by Obamacare.

    http://youtu.be/UuA2_P-m4Sk

  • Hi Guys. Thanks for all the comments and I just wanted to ask, did any of you pay attention to the market today? A drop of over 300 pts. As I stated above in my blog, I really think this is the year this bullish stock market of ours comes to a grinding halt, very similarly to what happened in 2007. I can't stress the points I made above any stronger than I did. We are going to see this stock market take a huge hit this year because of the fed's policy to pull back quantitative easing. Sure, it's only one day and sure, one day isn't a trend but, when was the last time we saw a 300+ pt sell off? That's my point exactly, you can't remember the last one unless you go back to 2007......get my point? The stock market is as much about fear, anxiety and the intangible as it is about hard numbers. So, let's first look at the fear and uncertainty, you are going to hear a lot of these two words in the next 24-48 hour news cycle.

    Our stock market doesn’t operate in a bubble as some would have you believe. When it sees QE coming to an end, it knows that our economy isn’t as strong as the White House would have you believe. More importantly, it knows that the global emerging markets are definitely not as strong as some would say and therefore, fear runs rampant. The biggest problem is that emerging markets, like South America and Africa aren’t “emerging” much these days. In fact, because QE is ending and borrowing money is getting more expensive, people are pulling out of these markets because the risk isn’t worth the pay off. That then puts too many dollars in circulation, driving up inflation fears hence why the Fed has stopped QE. Well, the problem is, the Fed can’t see that they are creating the problem in the first place and now, we got dollars everywhere. In fact, we got so many dollars everywhere that the paradigm has changed and people expect money to be given out free of charge. Well, couple that with China saying…”um….maybe our factory sector isn’t doing as well as we said it was and well….maybe our consumers aren’t really buying as much as we said they were and um…..maybe our real estate was in a bubble and we over built…..um, maybe we should dump our dollars because, let’s face it, dollars aren’t worth as much as (fill in the blank)” Then all hell breaks loose…like we saw today.

    So, we will see a knee jerk response by the Fed in the next couple days, especially if we see another drop tomorrow which so far, futures are pointing towards. This response isn’t likely going to quell fears because the reality is, without QE, NO ECONOMY IS STABLE ENOUGH and we could see a hard hit and dare I saw it but, I do think this is going to be the year of the double dip recession.

  • How depressing, but Honest &True!

  • I certainly agree there is a lot of information the Administration is not being honest about. They need to suppress it as long as possible. After all, in order for socialism to implement you must bankrupt capitalism. When it finally all collapses they are banking  on a recovery of socialism.

  • INSANELY good article Jesse. You are right on point. This is probably the most honest, spot on dissection of what is really happening and what the ramifications of the government intervention into capitalism will be this year. You are like Peter Schiff Jr. Here. :-)

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