Experts Offer Solution To Troubled Housing Market – Maine Real Estate

Five Solutions for a Troubled Housing Market
How do you fix a troubled housing market? Forbes.com asked that question of a broad range of housing experts, including CEOs of real estate firms, real estate practitioners, economists from lending institutions, and research directors at analytics firms. Here are five of their best suggestions.

1. Restore investor faith. “Mortgage fraud, by both borrowers and insiders, must be identified and prosecuted in order for faith to be restored in the market,” says Anthony Sanders, professor of real estate finance at Arizona State University.

2. Expand Fannie Mae, Freddie Mac and the Federal Housing Administration loans. “Our local banks and community banks have done a great job providing funding. (FHA) should be there as a supplemental for people who have good credit,” says Congressman Lincoln Davis (D-Tenn.)

3. Cut construction and prices. “The market will only hit bottom after builders cut construction and sellers slash prices,” says Mark Zandi, chief economist at Moody’s Economy.com. “The longer builders and sellers hold on, the longer the market will struggle.”

4. Bring back non-agency loans. “The dramatic seizing of the mortgage-credit markets caused the elimination of almost any loan that wasn’t backed by Fannie Mae or Freddie Mac,” says Bob Walters, chief economist at Quicken Loans. The revival of non-agency loans “will add much-needed mortgage funding to potential home buyers and folks looking to refinance.”

5. Buyers and sellers get real. Nelson Gonzalez, senior vice president of Esslinger, Wooten Maxwell, REALTORS® , believes that once buyers realize that they’re not going to convince a seller to accept a rock-bottom price, fluidity and activity can return to the market. “There is much pent-up demand,” he says, “and buyers have been sitting on their hands for some time now.”

Source: Forbes, Matt Woolsey (11/07/07)

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