what is the effect of sub-prime crisis? anybody directly affected by it?
Raj
http://www.yourmitra.com - website for all home needs - rentals, real estate and home making
2007-09-04 20:27:29 · 6 answers · asked by raja k 2 in Business & Finance ➔ Renting & Real Estate
It's more difficult for people with credit issues to qualify for home financing.
2007-09-04 21:42:24 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Many people are losing houses or are going to lose their house (that they really couldn't afford anyway).
Many neighborhoods will have stagnant, if not declining prices for homes.
Banks and other financial institutions that have been stung by the higher foreclosure rate are less willing to lend money to people (in general), affecting those with borderline credit the most. It has also greatly slowed the real estate market because banks are checking people very carefully right now.
But worst part is for people who work (or worked) in the real estate industry. Over the past month there have been over 40,000 people thrown out of work as mortgage companies slow down and/or go out of business. It affects agents commissions (salaries), appraisers, inspectors, contractors, real estate attorneys, Home Depot and other home improvement stores, etc.
It has an effect on the economy as a whole.
Of course a lot of the sub-prime mess is like all real estate, very localized. In some areas it is having a huge impact and in other areas, not so much.
2007-09-05 04:56:20 · answer #2 · answered by Rush is a band 7 · 1⤊ 0⤋
Anybody and everybody in the mortgage and housing fields are directly affected by the crisis. It is not only affecting subprime, but also people with good credit due to rising interest rates on home equity loans. Everyone is scared right now and the market is very limited on liquidity.
The American dream is to buy more than you can afford and live up to your eyeballs in debt. It has now caught up with them and they are paying the price. California is going to get hit hardest of all. I would be willing to guess that 90% of California is in interest only, neg am, stated, or arm loans that are about to readjust and with current lending standards, they will not be able to refi and wont be able to afford the new payment.
2007-09-05 05:24:51 · answer #3 · answered by twinturbo1994 4 · 0⤊ 0⤋
TO littlewahine78,
the buyers in foreclosure didn't cost you one cent in lost equity...they were the ones that drove the value of your home up. If they access to easy money was not there, you would not have seen the appreciation that you did.
The end result is that you are probably where you should be in terms of value. The only way you would have gotten into trouble is if you got greedy like everyone else and took out the "equity" that you thought was in your home. If you did that, then you may owe more than the place is worth.
2007-09-05 06:23:26 · answer #4 · answered by Anonymous · 0⤊ 0⤋
After the recession in 2000 economy, the controlling agencies like the Fed tried to increase the liquidity by reducing the lending rates; which made the people to invest in riskier investments. Lenders took on greater risks too, and approved subprime mortgage loans to borrowers with poor credit. Now the housing bubble blew up and dozens of mortgage lenders declared bankruptcy in a matter of weeks. This sent a wave of fears in the market called the Subprime crisis.
2016-05-17 06:23:58 · answer #5 · answered by ? 3 · 0⤊ 0⤋
the price of my home fell b/c of many neighbors houses have been forclosed on and sell at lower prices now. My home is beautiful and only went down b/c other homes sold for cheaper. I'm mad b/c they were dumb adn bought what they couldn't afford. Now I'm paying the price in lost equity for their (and the lenders) stupid decision.
2007-09-04 22:45:39 · answer #6 · answered by littlewahine78 3 · 0⤊ 0⤋