The amount of DuPont homes for sale has seen a significant change since the boom time of 2004. Some of the major factors that gave way to the boom were the decrease in interest rates, which were normally 10%, had dropped to 4%. Another one was an influx of investment capital from foreign nations such as China which was buying our mortgage debt and securities. This over supply of capital caused Wall Street investors to pour money into banking and companies buying debt. But the most prominent cause was the banks relaxed regulations that made loan financing a walk in the park. You may have seen banks advertising “no doc” or “stated income” loans that pretty much guaranteed financing for anybody who was able to provide some “proof” of income. At the time investors were able to profit hugely if they were able to leverage their debt and not finance their income as in equity lines. The mistake that many made was that profit was thought of equity, but in reality it’s financed debt that should be avoided for the ladder, raw cash. For instance if I was to take out a second(equity line) for $100,000 on my house at 7% interest or to sell the house and profit $100,000, I would of picked to sell the house and have raw cash instead of interest bearing cash.
Now the banking regulations have completely changed and financing is as difficult as it’s ever been especially for those who have more than one home. But does this mean home prices will increase and rental rates will go up. It’s a difficult question to answer because of all the factors that one has to take into consideration.
While many drive around and see many dupont homes for sale, the interesting thing is that they are selling even in a slump economy. Dupont home sales have averaged the same since the 1st quarter of 2008 and have had a slight increase the 4th quarter of 2009 according to city-data, while home prices in Dupont have an average median of $300,000 since the 4th quarter of 2008. What does this mean? It means that prices and rents will either maintain their average or decrease, but not significantly.
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