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The portal housing news live provides you with the daily housing news. It informs the readers about the recent housing market news, housing crash news, real estate news and housing bubble news. Additionally, it has important links about how to buy and sell Real Estate.
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Has Housing Market hit bottom yet? (Updated 6th December 2009)
The debate over the present status of the housing market is still raging in the economic and housing circles. Many recent housing reports are suggesting positive changes, which has led many to wonder if the housing crisis is finally over. Realtors and the housing crisis experts are offering their opinion on this issue to help us understand the current housing situation better. Following is a brief overview on the recent housing market predictions and few reasons justifying the assumption that Housing meltdown has not yet completed.
Unemployment - Many economists believe that recession ended in August itself. However, some believe that the recession may extend for a few more months. There are lesser job cuts, which mean they will increase the number of individuals or families, who can afford to buy homes. Nevertheless, the job market will take another year to recover completely. The existing unemployment scenario has made it difficult for people to make their mortgage payments. Even lenders are unwilling to help homeowners, thus increasing the rate of delinquent loans. This automatically decreases the chances of families to invest in homes.
Mortgage Foreclosures - The mortgage rates are at an unprecedented low. This has encouraged buyers to invest in low-end homes. Most of them are first-time homebuyers. Besides, many investors are buying low-priced condominiums in bulk. However, mortgage rate will increase gradually. Once the mortgage rates start increasing, it will force the real estate prices to fall even lower because less people will be able to afford the higher mortgage rates. This, in turn, will lead to more foreclosures. Even ARMs have not helped. Even though the initial monthly repayments are low in the ARM scheme, the rates start increasing after a point, thus making the mortgage repayment much higher. This will lead to more foreclosures, as people fail to make the high repayments.
Unlisted Available Houses In this current 2009 Housing Market, a shadow inventory is often referred to the list of available homes, which have not been disclosed for sale in the market. Many banks, financial institutions, builders, and lenders have a list of properties that they have not been disclosed in the market yet. Realtors believe that these properties will come into the market close to March 2010 and the banks may still delay it beyond March because Government is urging banks to not flood the market with their foreclosure listings. This may further thwart the improvement of real estate prices for quite some time.
Government incentives to home buyers are going to end soon Government is providing the 8000$ tax credit which will end in few months. The tax rebate is luring many first time buyers in the market. Once this tax rebate is finished, you will see fewer buyers in the market and the prices will come down. Cynics also contend that this stimulus has helped only those people, who were already planning to buy new homes.
Fear Many factors in the past decade have contributed to the unwillingness on the part of potential buyers to invest big time in property. Since 2005-2006, the rate of property has decreased. Besides, the dotcom failure and the recession that hit the world in 2008 have further contributed to the total loss of 25 trillion dollars in the country. This has caused fear and panic among the homebuyers, who do not want to invest in anything big. Therefore, the housing market update is that people will remain fearful for quite sometime. However, with the recession easing out, more people are in the mood to make wise investments. Prudence, rather than impulse, will rule the day when it comes to buying homes.
Housing Cost There may not be any increase in the real estate price/cost in the near future or even in the next few years. Instead, the cost may decrease in the next 2 to 4 months. So, fewer buyers will be seen in the market which means low demand, which brings the prices even lower. However, the sale of pending homes has increased steadily for several months. This is a positive sign. Moreover, low housing prices have encouraged people to invest in low-priced homes. This has stimulated the sale of homes in the market. However, according to Moody's Economy.com report, housing prices will drop to lowest in the fourth quarter of 2009. It predicts a 36.2 percent peak-to-trough decline. Besides, there are many more sellers as compared to buyers in the market, as many still prefer to rent. Consequently, there are several properties for sale in the market, but not many are willing to invest in them.
Credit Rating Many Americans have low credit rating, high debt, and not enough money to make a down payment on property. To add to this, banks are making stringent rules about mortgage approval, which also include high credit rating and low debt rate. These further make buying houses much less easier for many. However, these days a new trend has hit the housing market badly. Many people with high credit rating are strategically defaulting on their payments. According to surveys, there are 580,000 cases of strategic defaults in 2008. The instances of strategic defaults are by far the greatest in the real estate financial sector. This is a more serious problem than foreclosures.
Cost Cutting The result of the credit crunch has made many Americans cut down on expenses and to deleverage their balance sheets-it means they are trying to reduce the percentage of debt in their balance sheet, either by lowering expenses or by selling assets. Today, more Americans are investing wisely and are trying to avoid loans and debts. Many are consulting experts so that they can make better housing investments. However, the GFC has made people cautious, and it will take some time for many to start spending or investing again.
Price Reversion To The Average Often when things or assets are priced higher than normal, the price not only tends to come down to the median, but it often plunges way below it. The same thing may be possible with housing prices-they may change back to the standard average.
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