Early this month, the government announced that it would place Fannie Mae and Freddie Mac under conservatorship, essentially becoming the nation’s largest mortgage lender. This sent stocks into a rally and interest rates lower, as opinion makers applauded the government’s move to stand behind Fannie
and Freddie’s multi-billion dollar debt. I, like many, hope that this move will help reverse the recent slump in the general housing market. And, I hope the good news will motivate sales. Why?

This year, since January 1, a mere 30% of all single family and condo inventory has sold. Those priced between $200,000 and $350,000 were most active with 40% of the inventory in this category selling, as opposed to the $1 million-plus market, where only 22% of the active inventory traded. Understandably, the largest number of active listings continues to exist in the under-$200,000 market, but surprisingly, only 34% of homes at his price point sold this year. This precisely is the category that should strengthen quickest if Uncle Sam, Fannie and Freddie work their magic. It’s also the category which traditionally spurs
the market as sellers trade up to the next price point. Finally, just as an aside, and because most people I know love to hear about the high end of the market, I’d like to share another interesting phenomenon taking place: More $1 million-plus residences have sold than those priced between $750,000 and $999,999 this year. This may indicate that investors are taking advantage of the fact that homes priced above $1 million sell on average at 83% of list price, while those at the lower price point, sell at 90% of list price. Essentially these buyers are getting “more bang for the buck.”

While the jury is still out on the effectiveness of our government’s mortgage rescue, there’s at least hope that this action is better than none. Equally important, by the time our “season” begins, hurricanes
and The Election will be behind us. Let’s just say I’m counting on new beginnings and on Uncle Sam, Mae and Mac.

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