The serious decline in housing sales is well documented. This downturn was preceded by several years of rising home prices in our area. The driving force fueling the rise in home prices was the availability of low interest money. Easy availability of home mortgage money, plus historically low interest rates, allowed the demand side of the market to build.
When buyers could expect 15 percent to 30 percent appreciation and get 6 percent interest rates, who would not be motivated to buy? It was a no-brainer! Of course, high demand leads to higher prices. And, high demand leads to more new homes, as builders respond to the demand.
The underlying expectation was that the market value of the home would increase quickly, and the buyers would be covered, if they needed to sell. Home ownership became speculative.
Sub-prime, alternative, no-doc and other high risk loans are not limited to low income or poor credit buyers and are not always predatory. Often, very sophisticated borrowers chose to keep their cash and leverage the purchase. In all price ranges, the easy availability of low interest money fueled the demand for home ownership, as well as investment in rental property. Inevitably, the demand for homes led to price increases and elevated inventories. Then, the cycle was broken.
What caused the break? Foreclosures. Investors soon realized mortgage-backed securities contained more risk than expected, and they stopped buying them. Suddenly, lenders did not have this new market for selling many of their loans. Without the flow of funds for easy mortgages, demand for homes slowed down. Prices began to fall and oversupply conditions prevailed. This has created challenging conditions for many home sellers.
Of course, real estate markets are local and some localities will fare better than others. But, in nearly all areas, the effects of the new tighter requirements for home mortgages will slow the market.
For the next year, sellers will have to consider the fundamentals to attract a buyer. They will need competitive pricing, excellent presentation and top-level marketing. Buyers will have to have a down payment, good credit and proper income for their loan.
We are your local experts, we provide excellent, honest representation, and hold honesty and integrity above all else. Please allow Bradley E. Arnowitz, P.A. & Associates the honor of marketing your home to qualified buyers.
Visit us on the web: www.ArnowitzProperties.com
Contact us at (305) 776-6113 or @ ClientCare@ArnowitzProperties.com
BRADLEY E. ARNOWITZ, P.A. & ASSOCIATIES
HONESTY * INTEGRITY * RESULTS
Saturday, October 13, 2007
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