Here in Southeastern Michigan it doesn’t seem that the bank bailout is that important. None of our local Michigan banks have failed right?
Unfortunately we need the bank bailout for the simple reason, that the banking industry will become stabilized. We need banks to continue to loan money. If there is no stabilization of the banking industry then student loans, credit cards, and business loans will become much harder to get. Mortgage interest rates will rise if there is not enough money around. Do we need higher rates to further slow down the Metro Detroit housing market.
I had a client that had great credit scores (over 750) get turned down for a credit card. He makes good money, he has money in the bank. He is a good credit risk. I would loan my money to him. He just wanted to switch credit cards to get airlines points. But the bank said no. If there is no bank bailout many businesses will not get loans. Interest rates will go up. Remember the days of 15% – 18% mortgage rates?
We don’ t need those times back. But will the bank bailout solve the Metro Detroit Real estate problem? No unfortunately there is nothing that the government can do to resolve thereal estate problems. It is going to take time. There are too many Metro Detroit homes for sale and not enough home buyers. And there won’t be enough home buyers for these Livonia homes, or Canton Homes because many people can not qualify for a home loan. But if there is no bank bailout home buyers won’t be able to get their home loan approved. So fewer Canton Homes will be sold, fewer Novi homes will be sold. We need the bailout even though many people don’t realize it.
Tighter restrictions have reduced the number of available buyers. It will take five - ten years before we have a resurgence in Metro Detroit housing market.. But hang in there and keep paying your home mortgage down. Life within your means. The Metro Detroit Housing market will come back. We can all weather this economic storm together. We will come out of this standing up. But the key is to keep enjoying life with your family and friends as we go through these tough times.. Take Care Russ Ravary