New Jersey Real Estate Agent

What are the potential effects on the Princeton Real Estate of Freddie Mac and   Fannie Mae woes?

You probably already heard that the U. S. Treasury and Federal Reserve, concerned about the global implications with the intensified loss investor confidence in the two mortgage giants, have taken action to boost this confidence.

Briefly,  the Treasury would ask the Congress to approve a temporary increase in a line of credit to Fredie Mac and Fannie Mae companies. The Treasury would also ask for temporary authority to buy equity in either company, if it becomes necessary to ensure the steady flow of money into home mortgages. Federal Reserve granted authority for the two companies to have access to the Fed’s discount window, in case a short term funding was needed later. You could find the details are on the 1st page of Wall Street Journal. 

For those who are now in the Princeton real estate market and are concerned with the implications of the mortgage crisis and the effects of  Freddie Mac and Fannie Mae “struggles”, here is a bit of background.  Freddie Mac and Fannie Mae are the country’s largest sources of funding for home mortgages and together own a guarantee almost half of all home mortgages in this country. The companies buy loans made by banks, and sell them as packaged securities to investors. The companies were chartered by Congress to  support homeownership through availability of credit lending for home mortgages. Both companies are owned by investors and last week had their stock fall almost 50% prompting the Givernment actions over the weekend.

This morning I heard NPR’s Cockie Roberts   say that this situation is “too serious for politics” and that both presidential candidates have refrained form speaking much on the subject.

If Barack Obama and John McCain are not sure of the effect of these developments, the rest of us could just speculate.

With that in mind, my opinion is the US Government announced plans are very important for Princeton real estate. The luxury segment of the market so far did not seemed greatly effected by the mortgage crisis. In the first six months of this year we had 5 Princeton homes sell for over $3 million dollars. This is more then in any year, in the period from 2003.

Princeton real estate has not been much subjected to the effects of the sub-prime mortgage crisis, and the buyers who are in the market now and need to buy are still pursuing their search even with the raising interest rates during the summer.
There are fewer local buyers and many of the ones looking now for Princeton homes for sale have been transferred and relocated because of their jobs.  The effects of the Freddie Mac and Fannie Mae and the potential widespread economic fallout , could put some Princeton area buyers on the sidelines awaiting more market stability and lower mortgage rates, and this putting downward pressure on home prices. The Government  intervention would hopefully shore up the investor confidence, including the confidence of the Princeton real estate buyers.

Resources for finding best Princeton real estate:

How To Buy And Sell Your Princeton Home Like A Pro

Monthly and quarterly Princeton real estate market housing reports:

Princeton area Housing Prices, Market Reports, Statistics

Princeton NJ Mercer County Real Estate Market Housing Report -First Quarter 2008

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