Earlier today, Treasury Secretary Henry Paulson announced that Fannie Mae and Freddie Mac have been placed into conservatorship by the Federal Housing Finance Agency (FHFA). This is the most important event our industry has experienced in the past three years. This is good news for both the mortgage and real estate markets.
This government takeover will be a catalyst for the following changes:
- Immediate reduction in mortgage rates due to the narrowing of Fannie/Freddie yields over Treasuries
- Stabilization of credit markets
- Positive changes in investor psychology
- Positive impact on real estate market due to lower rates. When combined with the first-time buyer tax credit, this will stimulate the first-time home buyer market, which will unlock the trade-up market
In the future, we will look back on this event as the beginning of a slowly improving real estate market. Please pass this positive news on to our sales associates and employees.
Larry
(quote from: Larry Flick IV, Chairman and Chief Executive Office of Prudential Fox and Roach Realtors printed with permission)
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