We have talked a lot on this website about the fact that we are coming through a major financial crisis, where lending and loan facilities have all but vanished, the cost of debt has increased tremendously, and the difficulties in getting a first mortgage or even an investment mortgage have skyrocketed.
All of this doom and gloom discussion may be getting you a little bit down. For that reason, in this article, we will focus on exactly when it is that the times will start to shift towards more favourable conditions for home ownership.
How long exactly will it take until the lending criteria and standards of the past few years come back to the mainstream? Unfortunately, the answer to this question may not be as clear-cut as some would think.
As banks have written down hundreds of billions of dollars worth of loans over the last year and a half, lessons have certainly been learnt. As well as this, regulations have changed, businesses have disappeared, and the mortgage industry as a whole has had a shakeup.
Certainly, lending criteria and conditions will ease, however those who are hoping for a return to the old system may be waiting in vain. The fact of the matter is that the previous system was simply not sustainable, and was therefore setting itself up for a failure of the scale for some time.
Our best guess would be that by this time next year, potential homeowners will have an easier time accessing credit than they will at the moment. Whilst this may be a little bit too long for some people to wait, it may actually be one of the best times to purchase a home.
As any astute homeowner will know, house prices have fallen between 20% and 40% in many states of America in the past year and a half. This presents an amazing opportunity to people who are looking to purchase a house for the first time. Indeed, there are even a number of bargains out there to be had.
However, what is very interesting about this is that prices have not actually stopped falling. It may be the case that prices will reach their bottom at the same time as lending standards ease, therefore creating a positive combination for potential homeowners.