The Condition of The Housing Market
By Alan Sharp
It is an interesting real estate market we’re living through. Almost every state is experiencing real estate value decreases. Housing inventory is at all time highs, and the rate of foreclosures is awful.
We are seeing these dramatic market shifts is because mortgage guidelines became too lenient. People who shouldn’t have qualified for loans, were now qualified. Another factor that added to the real estate meltdown was that mortgage interest rates dropped to the lowest rate they had ever fallen to, and buyers could now also afford more house. More people were able to buy, and demand for housing saw dramatic increases. The number of available homes couldn’t keep up with the number of new buyers, and prices went up. And up. And up. Real Estate was now not affordable to the average buyer, so creative loan terms were created to help more people who couldn’t afford homes, to temporarily afford homes.
This appreciation in prices created real estate investor speculation than ever before. Some areas saw more than half the houses being purchased by real estate investors. They purchased the homes and then flipped them for large profits. Overall the economy boomed, people borrowed against their increased home values, spent the money, and all was well. But the problem was that the real estate boom was all fueled by artificial, unsustainable forces. Real Estate weren’t bought because of a housing need, they purchased them because they could make a profit.
Then reality hit. Housing was not affordable and home sales dropped. The economy started to slow, and people couldn’t make payments on the homes they never should have bought. The credit market crumbled. Banks failed, and government has stepped in to compensate for the effects that easy financing wrought.
Now mortgage rates are again unrealistically low, but this isn’t fixing the problem because Americans fear buying, and because it is not nearly as easy to get mortgage financing like before.
The number of homes for sale is high, and there are more MLS listings than imaginable. Skilled buyers are getting a bargain so that even if home prices dropped further they’d still be in good shape.
The real estate market has experienced some dramatic shifts this decade. The current real estate market has seen drastic real estate value drops in most of the US. The number of homes for sale in major areas is at all time highs, and there are more homes in default in history. Some areas are beginning to shift again. Now might be the opportune time to buy real estate.
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