A Glance Into the Future of Real Estate
Deflation has attained double-digit proportions in a number of the country's worst real estate markets. Though eal estate market problems have now spread throughout the country, it would appear as though California has been cursed with the fate of ranking among the worst. This is due in large part to the fact that the highest rate of home value deflation has occured in California within the past several months. In fact, the prices of homes in California have dropped to unprecedented levels.
One particularly difficult market at present is in Miami, Florida. Here, the drastically decreasing property values have resulted from high foreclosure rates as well as a very weak mortgage market. This situation is not new, however. In fact, for two consecutive years, Miami has been ranked among the worst real estate markets in the entire country. Miami's condo boom, which occurred only a few years past, has resulted in additional problems which have now snowballed into an immense real estate bust.
Not surprisingly, California and Miami were easily predictable to be among the first to fall with the looming real estate crash. Nevertheless, there are certain other markets which will inevitable also crash, though they were not as easily predicted. The rapid demise of the hosuing markets in California and Florida is attributable to the rapid increase in home values which occurred during the previous real estate boom.
In contrast, other markets did not see such drastic and rapid increases, thus allowing them to remain competitive for this long. Massachusets, Indiana, Arizona and Nevada are among some of the states where declines in the value of houses combined with high foreclosure rates have combined to create a significant real estate market deterioration. The significant number of layoffs occurring in Michigan have created an economical state which has impacted greatly on the housing market.
The coming months should see the resetting of several million mortgages on adjustable rates which is expected to create a subsequent worsening of many housing markets. This restting of mortgages is likely to cause an even greater number of homeowners in certain markets to experience great difficulties in meeting their obligatory monthly mortgage payments. As refinancing becomes a less viable option for an increasing number of homeowners, they will either be forced into foreclosure or short-selling their homes.
Most statistics predict that major problems still remain on the horizon throughoutthe rest of 2008. Many of these statistics indicate that the decline in property values is likely to continue and new homes will possibly see losses of as much as 18% before the end of the year. There are, however, some indications of a possible stabilisation in the market around the close of 2008 to start of 2009. Nevertheless, many experts will hasten to warn that any rebound in the market will still not restore it to its former glory. Compared to 2005's housing peak, the rebounded market may very well still be significantly lower. This is partly due to the fact that rapid price escallations in many areas prevent restoration to the previous states.
In some areas, however, there remains some amount of hope. Sub-prime mortgages are currently fleeing many markets either by way of foreclosure or by quick sales. The incumbent stimulus package is predicted to provide aid to the hosuing market in a number of areas.
There is expected to be some much needed relief for first-time property buyers that had been previously forced from the market. Current homeowners may, however, experience a much longer waiting period before they are able to enjoy this kind of recovery. The cause of this situation is that most homeowners remain reluctant to sell their homes and lose their previous home equity. It is a simple fact that a surprising number of homeowners have not yet accepted the fact that their homes are no longer worth what they were in previous years.