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Where to Invest in 2009

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By : Jason Deines    99 or more times read
As one of the most volatile years in the housing market comes to a close, good deals are plentiful, the government is providing uncharacteristic assistance and incentives for home mortgages, and real estate investments may begin to exhibit genuine promise.

Home prices are still low, and the amount of homes for sale in many price ranges is ample – perhaps too much so. In fact it would take about a year or more to rid the market of the abundance of real estate available. This is compared to a 4-6 week timeline that is usual during a strong real estate market. New elects are taking control in Washington promising to bring in direct help from the Treasury into the sick housing and mortgage markets. Industry experts along with the National Association of Realtors conclude that government incentives could finally put a floor under degeneration of home prices making 2009 a good year for buying a home with increasing appreciation potential and low mortgage interest rates.

In the latter part of 2008, the NAR estimated that if the government would pay down rates on mortgages to 4.5 percent, basically by paying lending institutions similar to the way homeowners pay points to get a more attractive rate, it would increase home sales by 500,000 homes. Banks have also jumped on the bandwagon by offering 30-year fixed rates of about 4.75 percent. Mortgage rates for the new year have begun at a 50-year low for conventional fixed rate loans, which have been the foundation of the housing market for years.

First-time homebuyers, that is a homebuyer that has not purchased a home in the past 2-3 years, may be eligible for a $7,500 tax credit for buying a new home. This is one of the incentives being offered as part of the government’s Housing and Recovery Act, which is an emergency stimulus packages directed toward the nation’s housing crisis.

Naturally many Americans are apprehensive, and rightly so, of mortgage lenders in the rouse of the subprime debacle. Almost everyone was affected or knows someone that was affected by unscrupulous lending and the harm it caused. People were given mortgages they didn’t need, lured by teaser interest rates that unexpectedly skyrocketed and became more than the borrower could handle.

Perhaps the best news for the real estate housing market in 2009 is that the loan sector is going to be under greater scrutiny and government regulation. The dishonest mortgage companies are either out of business or facing tough legal certification and licensing. The bar has been raised with more professional standards and stringent rules.

Meanwhile the stock market is not proving to be a safe haven for investments and rates on interest-bearing instruments like bank certificates of deposit are feeble. However the real estate market may be showing promise in 2009 and provide a good place to invest.

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