Reopen the Gates

It seems every news story we see has something about a bail out or stimulus package. Lots of ideas are floating around about how to re-start the housing market, yet I think there's one big factor missing, down payment assistance.

Anytime goverment gets involved in anything, it's like killing mosquitos with a Louisville Slugger. Yes, there were a lot of things that needed to be cleaned up in lending, but down payment assistance for credit-worhy buyers was not one of them. Most 100% or down payment assistance programs have gone away and FHA has just increased their requirements to 3.5%

Here's the result in our area. The low end buyers have been the most severely impacted. Home sales in the under $75,000 range decreased by 124 units, the largest drop of any segment of our market. Without these lower priced sales, the chain of buyers moving up is broken and the whole process comes to a halt.

I'm not saying we should return to the old days where anyone qualified and loans of 125% of value were common. However, the over-tightening of down payment assistance has had the effect of choking a market that's already battered as it is. I urge you to contact your legislators and urge them to consider responsible down payment assistance as a part of any stimulus or homeowner relief program.