Confidence

There is such a thing as over-thinking a problem or issue. A case in point is the current (and continuous) cacophony over the “mortgage credit crisis”.  Recent action by the Fed has drawn more attention to the issue (and, not so coincidentally, excited Wall Street), but I wonder more and more if we are in a true “credit crisis” or merely a “crisis of confidence”?

Most lenders and buyers I have talked to see no evidence of a lack of liquidity for mortgage loans, rather, they see the market as being more risky and acknowledge that rates are better reflecting this risk. Is the market more risky as a result of a lack of credit, or is it more risky because supply has outpaced demand? One could argue that a “lack of credit” makes a market less risky as it prevents the type over “irrational exuberance” that we’ve seen over the last few years.

What does this mean to Fredericksburg Texas real estate?  As mentioned in previous posts, we currently have an oversupply of inventory and weaken demand.  This will continue to put downward pressure on prices.  The fundamentals that have made Fredericksburg so popular over the last few years have not changed, the challenge is that the folks driving our demand have other things on their plate at the moment (and in many cases are just waiting for prices to fall further) and will jump back in the market as their personal financial situations settle down.  Experience Matters