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Boom or Bust? Whats Really Going On In The Housing Market? |
Housing prices have been soaring out of control in recent years, as lenders allowed borrowers to use adjustable rate mortgages to get more house than they could really afford. Now, with interest rates and property taxes steadily rising, homeowners all over the nation are feeling the crunch.
The market's never been hotter .... New home construction at an all-time low .... Highest foreclosure rates since the Great Depression announced in April ... Low interest rates entice new buyers into the housing market .... If you've been paying attention to the real estate news, you're bound to be wondering what's going on? Is the market hot, or is it quickly spiraling downward? Are home prices on the rise? Or is the balloon about to bust? If there's one word that can describe today's changing real estate market it's: confusing.
Housing prices have been soaring out of control in recent years, as lenders allowed borrowers to use adjustable rate mortgages to get more house than they could really afford. Now, with interest rates and property taxes steadily rising, homeowners all over the nation are feeling the crunch. In April alone, Fannie Mae, the nation's leading government backed mortgage lender, announced record high foreclosures as more and more homeowners find it impossible to make their monthly loan payments. It is estimated that nearly 1 trillion dollars in mortgage loans will go unpaid this year alone.
Industry experts agree: as banks and mortgage companies return to more conservative lending practices, fewer potential buyers will be able to enter the market. The result: housing prices are bound to spiral downward as more houses sit longer on the market before being sold. Industry leaders expect the this downward trend to last for at least the next 5 years, which could leave many desperate homeowners with little (if any), equity left in their homes.
Huge housing surpluses are also expected across the nation. Overzealous homebuilders have glutted the market recently with new construction that they are unable to sell. This, coupled with the fact that more than one-third of the nearly 77 million baby boomers expected to retire in the next few years are counting on the equity in their homes to get them through their twilight years, is causing a surge in available homes for sale, which is expected to drive down housing prices even further.
What does all of this mean for the American housing market? While real estate is always a good investment under the right circumstances, many of today's homeowners will be forced to either lose money on their homes if they wish to sell for years to come, or stay in overpriced homes. Housing prices will continue to drop in most areas, according to experts, as lenders continue to make it harder and harder to qualify for both standard mortgages and equity lines of credit.
So, what's a homeowner to do? If there's even the slightest chance that you may want to move in the next 5 years or so, get out now while the market remains stable. And if an adjustable mortgage payment is becoming a burden, either refinance into a fixed rate loan, or sell before it's too late and you're stuck with unpredictable payments that you can't handle.
Too many buyers leveraged the hope that housing prices would continue to soar in order to get into that dream house during the last market boom, only to discover later that their dream is turning into a financial nightmare. Now's the time to wake up and make some drastic moves. A new day is dawning, and those who don't act quickly may be stuck.
About the Author
For the past ten years Bob Freeman has been helping people build more money in their retirements. Now he has taken his successful strategies to a new level by offering teleseminar courses to help people make a better retirement for themselves than they ever thought possible. For more tips and strategies see www.retirementwealthforyou.com Article source http://w4rum.com/2552.t
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| [By Kimber Fulcher] [05/May/07] |
