I would say that the credit tiightening is bad for those trying to get a home and are barely qualifying. And to me, that is good. Because this who mess started with lenders dishing out loans to people who didn't qualify. Loudoun has 1200 homes in foreclosure right now. And with no major economic change in the region, there is no other reason to account for 1200 foreclosures other than people being given loans who barely, if at all, qualified for them. Then throw in that most might have been adjustable rates which are now resetting higher, and those people on the edge to begin with are being pushed over the edge. And the folks who sold the loans could care less, because they just resold the loan to somebody else once all was said an done, thus passing the risk of that loan to somebody else, getting their money back, and redoing that risky loan all over again. Ohh well, thats how markets work. Fear and Greed in a constant tug of war. A few years ago Greed was all the rage. Buy a home for $500k, resell it for $700k or more. Now all those $700k home buyers who got in at the top now have a $500k home and a $700k mortgage and the bank is saying payments are going up. Well, it'll all work out in the end. Of course, years from now...

VW, I haven't seen anything drastic in the markets in the last couple of weeks. All of the daily charts are showing a gradual decline in contracting activity with a corresponding slowdown in sales. The number of sellers taking homes off the market is also increasing and I expect it to continue through the rest of the year.

I have only heard anecdotely that lenders are tightening qualification criteria. Companies like Pulte must be feeling a lot of tension between selling inventory and qualifying buyers for loans. I am also hearing builders are now selling for cost. Breaking even is better than losing money. A great time to be in the market for new construction!

Merv,

Are you witnessing any problems first-hand with people obtaining financing? Do you think sales for August are being dramatically affected yet? It seems like August has always been a pretty slow month as it is around Northern VA.

I also wonder if builders like Pulte, who have their own mortgage business, will be able to provide customers with loans.

Anybody who cites the tulip mania in Hollard is by default, an economic expert. :) Lets just hope the Fed doesn't bail out the risk takers. Let them burn as a lesson on what not to do in the future.