This past weekend, I dropped in at the Second Annual Home Buyer’s “Fair” at the Los Angeles Convention Center. It was billed as a two day event, complete with seminars and other educational opportunities for the would-be home buyer.
Because of recent speculation–and some actual facts–indicating a slight upturn in the real estate market in some parts of the nation, I expected to find throngs of people eager to take advantage of the fairly low mortgage rates currently available, not to mention the relatively low home prices here in Southern California, which was one of the epi-centers of the subprime mortgage bust.
I didn’t find that, though.
Yes, there certainly were people there–though, at times, it appeared there were far more exhibitors than actual attendees; and, those who were not there in bank or real estate booths hawking information, seemed mostly to be other real estate professionals looking to network before jumping back into the investment market.
I did come across some people who actually went to the Home Buyer’s Fair because they were seriously looking for info and contacts so that they might buy a home, but they were relatively few and, when questioned, expressed a great deal of anxiety about whether or not they would actually go ahead and make the plunge.
In short, the “fair” was not exactly over- flowing with people excited about a mending economy (probably because it is not actually mending in most key areas)–which made me that much more attentive to news over the past few days that the next big shoe waiting to drop will be the bursting of the credit card bubble.
Defaults on plastic are way up..and banks are doing the one thing that could make matters worse than they already are–they are cutting some people’s credit limits, raising some people’s interest rates and shutting some people’s credit down totally!
And, this is expected to get worse as bankruptcy rates approach levels not seen since before the bankruptcy laws were tightened a few years ago.
All this is bound to decrease the average credit score that much more…which reminded me of what one agent told me at the fair at the Convention center…He said that , depending upon the mortgage, you may be able to pull it off with a credit score in the 650 range (700s were the norm before)…
And yet, because things continue to decline in the economy over all, that 650 score may soon look like a lofty goal for many!
That is not the best way to get the real estate market back on its feet…..Banks seem to be going out of their way to screw up people’s credit scores which, in turn, will make it more difficult for these same people to get mortgages since even a 650 credit score will be harder and harder to achieve (unless the banks grade on a curve, much like colleges do in order to inflate the averages of students in order to make it look as if they are actually learning something!)
My guess is, this soon to come credit bubble burst will have to be addressed in some way before we will see a significant improvement in the real estate market not just in a few areas but nationwide..and not an “improvement” based on super low prices because the properties selling nowadays tend to be ones that have been foreclosed upon.