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Finance > Real Estate > Home Prices Decline Again
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Article rating : 0.00, 0 votes. Author : Todd Hurst
The S&P/Case-Shiller Home Price Indices which was just released on April 29th 2008 stated that home prices have dropped across the United States once again. This decline has been continuing in most market areas from month to month since September of 2007. Further, most of the 20 cities which make up the indices have reported declines from January to February of this year. The indices further reports that the annual declines across the 20 major cities studied have a composite annual decline rate of 12.7%. A press release issued by the indices states: "there is no sign of a bottom in the numbers." Of course, their opinion is not shared by the National Association of Realtors and many other groups. They just happen to be the loudest voice in the doom and gloom choir right now.
While it's true that homes are not worth what they were a year ago or even a month ago. One thing is certain. The number of foreclosures, short sales and available inventory is likely going to increase in the near term. People who are easily conquered by fear will react but just giving up. They will quit paying their mortgages and just walk away from their homes, letting them go into foreclosure.
The public and real estate professionals alike are wondering when these declines are all going to stop. They want to know why it is continuing at such an alarming pace and what they can do about it. All it takes to understand the current situation is a little knowledge about the economic principles of supply and demand and anticipation. When the prices were skyrocketing from late 2003 through mid 2007, it was driven by the anticipation of future returns by investors. This coupled with the short supply of homes due to an over supply of buyers drove prices up beyond the income levels needed to support the new price levels. This coupled with risky sub prime loan programs based on stated incomes, negative amortization, and interest only programs is what produced the current housing market woes.
As sad as this whole situation is for home values, our economy and country at large, there is a great opportunity for new investors right now. With so much supply on the market, prices are going to continue to be soft until the demand and supply forces come back into alignment. That being said, there is current window of opportunity at the point where the prices bottom out, inventory is high and there are enough deals where the new investor has the greatest leverage. According to many experts, we are approaching that time or in it already.
This also points to the solution to the problem and it is really simple. When supply and demand come back into balance, this housing problem will end. To put it another way, the very investors who ran the prices up have the power to stop the decline. What we need is a new crop of real estate investors and buyers coming into the market who are educated about the great opportunity that currently exists. It's going to take people who are educated about the process and who understand that foreclosed real estate is a steal right now. This is not going to be for the faint of heart or the weak of spirit. The national media is not going to come out and announce that the market is better any time soon. When they do start reporting this, the vast majority of the great deals will be gone as prices begin to rise again.
Investors who are educated and ready to act now will be the ones who make the greatest profits. If you have ever thought about buying real estate for investment, now is the time. Further resources are available here:
http://tinyurl.com/58mdu2
Good luck
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