Both sides of the coin in the real estate market
Wednesday, December 2nd, 2009There is a massive ‘shadow inventory’ of around 7 million units, which is primarily made up of distressed and foreclosed properties, in the pipelines that the banks haven’t put up in the market yet. Once this shipload of inventory hits the shelves of sellers, it is going to further pull the rates down. This is one of the reasons why top researchers like Senior Managing Director of Research for Wall Street, Amherst Securities, Dr Laurie Goodman, believe that the market is going to go down further in the coming months, due to impact of the low cost inventory building up.
Dr Laurie Goodman also indicated that the prices could see a fall of around 8-10 percent in the forth-coming months. This may not completely push down the prices since the consumer demands are also increasing, which might just counter balance the price depression. Adding to the inventory of homes are the delinquent accounts, which have not been able to sustain the repayments due to a job market that has not really improved. Thus, with income in trickles, many have not been able to meet their commitments. These homeowners have been forced by circumstance to approach banks with foreclosure requests to qualify for government programs. The foreclosure rates in the country have increased over the second quarter by 5 percent.
There are multi fold factors, which have increased the foreclosure rates and will most likely keep them high for some time to come. Most lenders have not yet pressed foreclosures due to the loan modification programs extended to the homeowners. When this period ends, and the modifications don’t bring in the necessary economic relief, many more will be forced to close.
Adding to the difficulty is the yearly rate adjustments in flexible home loan rates, which will kick in now and may produce increased commitments resulting in greater financial difficulties for owners. Compounding to the fiscal problems is the mounting unemployment of 9.8 percent, which is slated to increase further. Therefore, most believe there will another tide of foreclosures soon.
The picture looks bleak and gloomy for many, but for others who have saved enough and are in financially secure positions, the situation is ripe for a home. The interest rates are the lowest and going down week by week, the prices are low and the choices are many, including resale homes. If you are financially stable, you should drive a hard bargain not only on the price of the house, but also on the interest rate of your home loan. This might be your best opportunity, but do your financials right and get them double-checked before you take the plunge.















