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Strategies & Market Trends : New US Economy Policy

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From: Arthur Tang	6/15/2007 9:39:32 AM
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Housing sector analysis? Many homes older than 30 years are fully paid off. Some older homes are refinanced and even sub-prime. The homes are revalued up to local market value and refinanced with extra cash for the owner as well as lower monthly payments on special negotiated interest rates. So, there is buying power from cash in home refinancing for home owners. These refinancing ended up in Freddie mac and Fannie Mae inventory. Then there are the new homes built which qualifies for FHA and VA home loan insurance. Some of these are bought for investment for resale. And there are profits that can benefit the owner to be spent on more investment on new homes. In building US economy, new homes are infrastructure to replace older homes in locations that have not been urban renewal projects. Federal government will be spending more on urban renewal projects(Fed 90%, locl 10% participation) to move people into financially depressed area. The rust belt had been revived in the last few years this way. The housing industry is basically land subdivision into track houses; and business development due to population shift in demographics; areas are thus financially improved. The infrastructure building will continue; and mortgage insurance will be emphasized, so delinquency is not a problem for the economy. And older homes has to be fixed up(do-it-yourself at Home depot or Lowe) to maintain value; and refinanced. Home sales may have to be owner financed in some areas in the US, delinquency means owners take back the house.

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