WALL STREET BAILOUT - GOOD OR BAD FOR US?

Amidst the tremendous amount of debate last week regarding the proposed “Wall Street bailout”, two things happened. First, Congress passed the Emergency Economic Stabilization Act of 2008. Second, almost everyone began asking, “Will it be good or bad for me?”

It matters little now whether you were in favor of or opposed to the plan. The deed is done and Congress has spoken. And, quite frankly, it would be quite speculative, to say the least, to pronounce that the plan will be good or bad for most individuals or businesses in the long run. We may all have our opinions on that, but only time will unveil all the ramifications of this legislation.

Spending much time ruminating about who will benefit and who will not is spending time on the wrong question. One thing that is known for sure is that non-performing assets will be cut loose from many lender/investor portfolios and they will come to the market at bargain prices. Mortgage money will be more readily available. The combination of those two elements means more opportunity for buyers.

It will also mean more short term price compression for sellers until these homes become absorbed into the marketplace.

One can hope that this plan will help distressed homeowners remain in their homes. If the plan is successful in slowing the rate of foreclosures, then ultimately inventories will drop and prices will stabilize. It is unclear just how long that might take.

In summary, our message to buyers and sellers remains consistent. There are tremendous buying opportunities right now and they should remain for the foreseeable future. Sellers must continue to price their homes below market value to get them sold quickly, thus preserving as much equity as possible.