Likely Changes For Real Estate In 2008
As many homeowners observe the current state of the housing market, they begin to consider just how much worse things will become before any improvements begin to take place. Given that the past year has so far been the worst for real estate thus far, it is no great wonder why consumers hold such great concerns. Property values fell sharply while default rate attained incredible heights. In addition, home ownership rates have also decreased as first-time buyers continue to be excluded from the market. The compulsory filing of bankruptcy among mortgage brokerages and the dramatic increases in foreclosures have served to only worsen the situation.
You, like many other consumers, may also be concerned as to just how much worse this situation is likely to become. Recent statistics have shown that property values are likely to continue their downward trend this year before any improvement is seen. This is due in part to the fact that there are has been no improvement in interest rates while credit difficulties continue to surmount. One major market concern for the upcoming months lies in commercial real estate. It is a common belief among experts that it will continue softening throughout the rest of 2008. This will include apartment and office buildings as well as shopping centers. Of note, this commercial softening would be due to the slow expansion of the economy which would in turn result in higher interest rates.
It is widely believed that real estate relief is unlikely to be achieved soon, and certainly not in the months to come. Property inventory has continued to increase over the past few months. This inventory will, therefore, need to be dealt with before any stability in the market can be achieved. The United States Census Bureau has indicated that the rate of vacant homes for sale in the U.S. during the last few months in the year 2007 was significantly higher than it has ever been since the year 1965.
The low housing demand is expected to remain as such, thereby further impaction property prices. Some high risk buyers that were once qualified for sub prime loans now find that they have been excluded from the market, thereby negating immediate relief. In addition, even those buyers qualifying on the basis of good credit ratings but a lack of funds for down payment have found it to be rather difficult to obtain mortgage loans.
Though residential markets across America have suffered a hard blow, Florida appears to be the most affected. This is due in part to the fact that thousands of condominiums currently under construction have been slated for completion this year. Though a number of deposits have been made already, it is feared that tightening credit conditions and continuing property value decreases will cause buyers to renege on their decision to buy these units. Should the number of buyers backing out of the deal be very high, a very serious problem will arise with defaults on construction loans.
California has also had some difficulties with buyers struggling to acquire high risk loans for the purpose of purchasing homes despite the ever increasing property values and now realizing that they are unable to make their monthly mortgage payments. It is quite difficult for many to sell these homes, however, as property values continue to drop while mortgage payments continue to rise.
Despite this evidently dark cloud, we can take solace in the proverbial silver lining. Though the market is expected to hit rock bottom in 2008, we welcome this event with open arms, since the market must crash completely before it can commence its re-ascent to the top.