2007-03-26 17:40:21 · 7 answers · asked by Mariposa13 3 in Business & Finance ➔ Renting & Real Estate
Actually, my intuition says that it's the beginning of a housing glut. Right now, since homes are just now going into pre-foreclosure, buyers are still trying to get what they owe on their mortgage and not ready to take a loss, some are. I see that changing in the next several months.
People that are unable to convert their ARMs to a traditional, fixed-rate mortgage, will unfortunately have to give up their homes to the banks or file for bankruptcy. My guess is by that point, the bank is going to try to get whatever it can for all of these excess homes that they own and the next wave of qualified buyers will be the ones to benefit.
I'm in AZ and I've been keeping an eye on the market as we'll probably be buying this summer. We moved out here almost 2 years ago when the market was at its peak. We're lucky that we waited. I keep an eye on homes in our area. For example, there are many more homes that have been on the market for 5 or 6 months. Then, many of those have shown price reductions of 1% or 2% every other month or so. Owners are paying closing costs and giving other incentives to buy. Keep your eyes open! (I like www.ziprealty.com and get lots of good information on homes that I'm watching.)
As far as your second question, this is a result of "subprime lending" practices. Yes, these people signed contracts and should have known what they were getting into but when you are talking about a new home, a first home for many of these families, it is easy to say "yes" and sign on the dotted line. Basically, since their income or credit could not qualify them for a traditional loan, they were willing to take a chance on an Adjustable Rate Mortgage or ARM. What's happening now, as stated in their contracts, their rates are going up and their payments are now beyond their means. I say that it is going to get much worse before it gets better. (Because they are defaulting on their mortgage, they won't be able to buy another house. Thus, more houses available.)
Let's see what happens...
2007-03-26 18:06:10 · answer #1 · answered by santan_cat 4 · 1⤊ 0⤋
If you pln to stay for at least 4-5 years it is still a good time. Prices might slip a bit more in some areas, but in a few years a home purchased now will still have appreciated. The problems with the market now are centered around fruad- either people or brokers overstating income to get loans approved, or lenders not informing barrowers of the risk of certain programs. When the rates on some of these programs adjusts or they have to start paying more than interest, some people simply can't keep up with the payments. If you want a home, buy a home. Just do it smartly. There is something to be said about minimizing risk and watching for good investments, but homes are more than a financial game. Generally the risk is low right now, as long as you get a loan without stretching your resoruces thin to make payments.
2007-03-26 18:04:21 · answer #2 · answered by moonman 6 · 0⤊ 0⤋
People who took rates based on prime rather than fixed rates. Or rates that are artificially low for a set period of time (say 2 years) are really feeling the crunch with rate and payment increases now. Foreclosures will actually tend to help lower market prices so that shouldn't discourage you.
Avoid adjustable rate mortgage type mistakes and find a home that is a good value and within your budget so you don't fall in those traps.
2007-03-26 17:45:33 · answer #3 · answered by G's Random Thoughts 5 · 0⤊ 0⤋
Subprime lenders lent money to people to buy houses that really could not afford to buy a house. Now the payments are catching up to them and they are finding out they really could not afford a house as big as they bought. Since they canot afford it they are starting to loose their houses.
From what I read this might mean house prices might start going down.
2007-03-26 17:45:12 · answer #4 · answered by J T 6 · 0⤊ 0⤋
Since the bottom hasn't fallen out of the market yet, it might be better to wait. In my opinion, prices are headed downward and will be for quite some time before it's all over.
2007-03-26 17:44:55 · answer #5 · answered by TheOnlyBeldin 7 · 2⤊ 0⤋
Interest rates are at very low rates. As long as you buy (and borrow) within your limits, now is a great time to buy!
2007-03-26 17:44:53 · answer #6 · answered by Dr. Trav 1 · 0⤊ 0⤋
Yes, a very bad time.
2007-03-26 17:47:37 · answer #7 · answered by bhupinder b 2 · 0⤊ 0⤋