By now everyone knows that the market for residential real estate has gone into a severe crisis. The tightening of mortgage qualifying guidelines because of the subprime disaster is a significant impact on home sales in general.
Most of the national home building companies reported heavy losses for the third quarter in the amount of ten million dollars, after posting healthy profits for the same period in 2006.
Foreclosures are at historically high levels in most states. But howalways the case, the substantial losses affect certain markets more than others.
For example, metro Atlanta, Georgia has any one of the hardest-hit areas for mortgage fraud. In addition, Atlanta has seen a market that is enormous investment in I-285, know locally as the extent of the highway.
Many areas in the city of Atlanta have been over by the investors was that the supply of available properties and rental properties more dramatically than theDemand.
Have in these particular areas, rental rates declined about 25% since 1999, and vacancy rates in some areas lead to a foreclosure snowball evaluated.
In these specific neighborhoods, I expect that prices will reach more than 50% of the 2005 peak, by the time we reach the bottom. Typically, this would apply to any major market where there are these same characteristics. These areas will take the biggest hit in the values. Smart Cash buyer will be picked up some good deals in these areasapproximately nine months from now. Buy prices at 30 or 40 cents on the dollar is likely to be shared before it's over.
Many investors in these areas will be financed through which most often associated with subprime 80/20 "piggyback" loans, which allows for no down payment, but just not 100% financing cash flow. As a result, many investors are "upside down", which is partly responsible for rising foreclosure rates.
The real damage was done in the investor market for the financing andtoo much emphasis on money in acquisitions. There are areas in every major city that will be hit hard by declining values and a lack of buyers. They will continue to suffer declines in the coming months, while the stocks are gradually balances with demand.
These are the areas where the bubble really existed, due to too much speculation and too little demand. As a general rule, whenever you have excess supply over demand, you have a blister on his hands. In the last ten years, investor activityfastest pace of increase as more and more beginners into the game to invest for the first time. Unfortunately, many of them poor choices when purchasing these properties and the results have heard a drastic increase in foreclosures was the investor.
In a suburb of Atlanta, the offer is also an issue, but there are still willing buyers and investors speculated more diluted, values and prices are a bit more stable.
But in those areas where over-supply and buyersQualifying is an issue that sellers still feel the pinch. About all the slump in housing has typically costs about 20% of sellers and 25% of its value since 2005, the market peak. High foreclosure rates in suburban areas, resulting in additional value erosion in the areas as they continue to aggravate the supply-demand problem.
The rule to remember is that the demand is driven by a local market. In this case, we have tightening credit conditions, will reduce the number of buyers can buy.Foreclosures are escalating for several reasons. The most common scenarios are driving foreclosures now, in no particular order, over-supply of inventory, investor-financed through the negative cash-flow sources and consumer spending with home equity lines of credit.
Many have borrowed too much against their houses, and can not rely on their payments, graduate payment mortgages whose low payments are now escalate to higher levels, and Fraud usually leads to aForeclosure. Builders have overbuilt and speculators have taken up about 20% more volume for the supply of homes for sale.
All this combined forces to deliver at a time when demand is declining due to a lack of liquidity in the mortgage market.
These factors are combined and keep a slump in the flats until the demand is finally beginning to take over the available supply. It will likely take at least a year in better areas, and two or more years in overbuilt areas.
Winnersbe smart investors, who have been waiting to buy at the right time. In my opinion, the best time to buy maybe a few months down the road. January 2008 could see the sale prices in inner city, nearing its lowest point in over 7 years. In fact, most areas will see the lowest prices in the years from early 2008.
Retail buyers - who live in the market for a house, should also be patient. Foreclosures have escalated in the upper-class neighborhood, and the prices arealso from up to 20%. It is assumed that properties for $ 500,000, sold in 2004, perhaps soon to sell for U.S. $ 400,000 or less.
A large builder in California, plans to take stock of the new home of its original $ 300K listing price discount of up to $ 150K. This is only a preview of things that can qualify for home buyers to obtain the funds.
Patience is the key for investors and home buyers. The best is still to come on the buy side.
If you are on theSupply side and you do not need to sell immediately, do not. It is not a good time for most homeowners to sell in most areas. There are some exceptions, but these are limited to high demand / low consumables such as lakefront properties in prime locations, prime coastal real estate, etc. Again, supply versus demand is always the question, up to the level of individual homes. If your property is highly desirable for any reason, your price less than the average, or it may increase.
Thecurrent market is actually the result of many factors, the convergence of this series of circumstances have to create. As always, there is a good site for each market. In this case, it is good to be a bad, over-buyer and seller.
The key to long-term success as a real estate investor on, always solid financial position and investment principles. Over-funding is a recipe for disaster. Keep your costs as part of your income and you will always be on the right side of the market does notNo matter what happens .***