Everyone is wondering what is going on in the real estate market and how does it affect them.The industry has been hit harder than it has ever been and has rippled into the entire economy. Many are surprised at just how much every industry is affected. Remember that after Sept 11, 2001, the strong real estate market was the thing that fueled the economy at that time, so it really is no surprise. Just think how many people are employed one way or another in the industry. Real estate agents, appraisers, loan officers, loan processors, receptionists, office managers, attorneys, pre closers, post closers, property inspectors, contractors, builders, heating and air techs, electricians, roofers, framers, cabinet makers, plumbers and on and on. There are really too many professionals to mention. When these professionals are affected financially and they can't spend money in the open market, everyone is affected. Then also when the mortgage industry is affected, it ripples into so many other credit industries and the people employed there such as auto financing, credit cards and so on. In this credit crunch, it is much tougher for the average consumer to finance things that were once so simple. When money isn't flowing and changing hands because of this, it is devastating to the economy.
It seem to all have started with bad, high risk loans given out in abundance by the lending industry. In both haste and greed to create more loans and money, these loans were given out like free government cheese. Most were subprime and arms that were scheduled to adjust after a fixed period. You hear a lot of people blaming the consumer for accepting these financial terms. What everyone should be asking is "Why would banking executives who know the financial industry better than your average middle and lower class consumer agree to take such risky avenues with investor's money?" Sure maybe some of the consumers should have known better but so many of these loans were given out fraudulently, with little to no education to the consumer and in haste to make a buck. There were definitely some buyers who used it to buy more than what they could afford but so many were told one thing and got another. Simply stating "They should have done their research online and avoided this mess" is not fair to say in all situations. The elderly woman on a fixed income who simply wanted to pull a small amount of cash out of the home she has owned for 40 years, should not have been given an arm. It should have never been suggested by the loan officer or approved by underwriting. The low income, low credit score family that just wanted to own and was sold the dream of ownership with a risky loan, should not have been given an arm. They should have been further advised in how to improve their credit score in order to qualify for a better loan and fixed rate. This to should not have been suggested by the loan officer or approved by underwriting. Did they really think that this low income family or elderly woman could really afford the adjustment? What if a major food manufacturer put a small amount of poison in food products to enhance the taste. This manufacturer never thought this small amount would cause any harm but it did and many people died from this poison. Should it then be said that these people should have looked at every ingredient on the label, did some research on the internet to find out exactly what it was and how it affected the human body? Well we all know that is not reality. We buy food with the confidence that the manufacturer has our best interest at heart and not just their bottom line. The poison should have never been put into the products. This to is what that average consumer felt when they were getting loans from a reputable lender.
So many people now are still wondering what they should do in this market. Well the answer for everyone is Buy, Buy, Buy!!!! If you are in the position to purchase, you're in the driver's seat. It has never been more of a buyer's market than now. It is not a good time to be a seller in most areas. Foreclosures and few buyers have driven prices down and days on market can be 12 months or longer. ABC news recently reported that the plunging home values are reminiscent of the depression. Banks desperately trying to unload inventory are offering short sales allowing properties to be sold at less than the loan amount. This is actually a great time to buy for primary resident or investment. Purchasing primary residents now is a great deal but also building wealth with investment properties. If you are in the position to buy as an investor and hold, this is a great time to do so. But warning to all this is not a good time for the flipper. Flipping simply means that a person intends to buy low, do some improvements and immediately sell for higher. Since this is a buyer's market (meaning much fewer buyers) a flipper would have a much harder time getting rid of the property quickly. As stated before it can take 12 months or longer to sell, depending on location and price. No real estate flipper wants to sit on a vacant house for that amount of time. This is a great time to build wealth now by buying investment properties low, holding and selling high later. Because many people are finding it more difficult to get mortgages at this time, they may be more likely to rent. So if you can grab those great deals now, do so.
Wealth very often is built during down times. When markets are down and the average consumer is shying away from investments such as real estate and stocks, investors swoop in for the low prices. When the market comes back around (and it always do) they have accumulated much wealth. But don't fret. If you can't buy right now, you may have a little time. Many advisors anticipate 2-3 years recovery time in the real estate market. So if you can't by this year, there may still be time next year.
Velvet Woodly,
It seem to all have started with bad, high risk loans given out in abundance by the lending industry. In both haste and greed to create more loans and money, these loans were given out like free government cheese. Most were subprime and arms that were scheduled to adjust after a fixed period. You hear a lot of people blaming the consumer for accepting these financial terms. What everyone should be asking is "Why would banking executives who know the financial industry better than your average middle and lower class consumer agree to take such risky avenues with investor's money?" Sure maybe some of the consumers should have known better but so many of these loans were given out fraudulently, with little to no education to the consumer and in haste to make a buck. There were definitely some buyers who used it to buy more than what they could afford but so many were told one thing and got another. Simply stating "They should have done their research online and avoided this mess" is not fair to say in all situations. The elderly woman on a fixed income who simply wanted to pull a small amount of cash out of the home she has owned for 40 years, should not have been given an arm. It should have never been suggested by the loan officer or approved by underwriting. The low income, low credit score family that just wanted to own and was sold the dream of ownership with a risky loan, should not have been given an arm. They should have been further advised in how to improve their credit score in order to qualify for a better loan and fixed rate. This to should not have been suggested by the loan officer or approved by underwriting. Did they really think that this low income family or elderly woman could really afford the adjustment? What if a major food manufacturer put a small amount of poison in food products to enhance the taste. This manufacturer never thought this small amount would cause any harm but it did and many people died from this poison. Should it then be said that these people should have looked at every ingredient on the label, did some research on the internet to find out exactly what it was and how it affected the human body? Well we all know that is not reality. We buy food with the confidence that the manufacturer has our best interest at heart and not just their bottom line. The poison should have never been put into the products. This to is what that average consumer felt when they were getting loans from a reputable lender.
So many people now are still wondering what they should do in this market. Well the answer for everyone is Buy, Buy, Buy!!!! If you are in the position to purchase, you're in the driver's seat. It has never been more of a buyer's market than now. It is not a good time to be a seller in most areas. Foreclosures and few buyers have driven prices down and days on market can be 12 months or longer. ABC news recently reported that the plunging home values are reminiscent of the depression. Banks desperately trying to unload inventory are offering short sales allowing properties to be sold at less than the loan amount. This is actually a great time to buy for primary resident or investment. Purchasing primary residents now is a great deal but also building wealth with investment properties. If you are in the position to buy as an investor and hold, this is a great time to do so. But warning to all this is not a good time for the flipper. Flipping simply means that a person intends to buy low, do some improvements and immediately sell for higher. Since this is a buyer's market (meaning much fewer buyers) a flipper would have a much harder time getting rid of the property quickly. As stated before it can take 12 months or longer to sell, depending on location and price. No real estate flipper wants to sit on a vacant house for that amount of time. This is a great time to build wealth now by buying investment properties low, holding and selling high later. Because many people are finding it more difficult to get mortgages at this time, they may be more likely to rent. So if you can grab those great deals now, do so.
Wealth very often is built during down times. When markets are down and the average consumer is shying away from investments such as real estate and stocks, investors swoop in for the low prices. When the market comes back around (and it always do) they have accumulated much wealth. But don't fret. If you can't buy right now, you may have a little time. Many advisors anticipate 2-3 years recovery time in the real estate market. So if you can't by this year, there may still be time next year.
Velvet Woodly,
Real Estate Professional
Solid Source Realty
email: velvet at atlantanetworkinggirls dot com
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