Unstable Markets Leave Buyers Confused

The defeat of the bailout bill likely isn’t good news for the housing market.

In the wake of Monday’s legislative defeat of the housing bailout, housing economist Thomas Lawler asked, "How many people are going to sit down and say: 'You know honey, it's a good time to buy a house?' The government really needs to get its act together."

Home prices have fallen about 20 percent since their peak in early 2006 and are expected to sink another 10 percent over the next year, according to Mark Zandi, chief economist with Moody’s Economy.com. But this new affordability isn’t driving buyers to the settlement table.

For one thing, loans are very hard to get. Lenders hurt by record defaults and foreclosures, are only giving loans to borrowers with the best credit. At the same time, rising unemployment is making it more likely that workers will be laid off.

"The predominant feeling is confusion," Jeff Casimir, a 27-year-old teacher in Washington, D.C., who is considering buying a home with his wife, wrote in an e-mail message last week. "I really have no idea what impact all these buyouts, takeovers, and proposals will have for me."

Source: The Associated Press, Alan Ziebel (09/29/08)