These days, real estate market conditions are a hot topic of conversation. From CNN to real estate bloggers, everyone is talking about what will happen to property values if a double-dip recession occurs.
No one knows if the real estate market can endure additional economic hardships. Conflicting reports are provided on a daily basis. The National Association of Realtors reported an increase in home sales during April and May, and a decline of 15.9 percent in June.
New York University Stern School of Business reports the increase of home sales occurred from individuals taking advantage of Obama’s first time home buyer program federal housing tax credit and anticipate sales will decline throughout the remainder of 2010.
A recent article published a Bloomberg, reported foreclosure homes are selling at 27-percent below market value and nearly one-third of property sales involved homes “in some stage of mortgage distress.”
At present, more than six million properties have fallen into foreclosure. As unemployment continues to rise, mortgage lenders anticipate an additional two million foreclosures will occur by the end of 2010. If these predictions come to fruition more than eight million properties will fall into the category of bank owned homes.
With an overabundance of foreclosure inventory, real estate prices will continue to fall. In order to compete with discounted bank owned homes, property owners will be forced to further reduce their asking price.
Additionally, property values drop when multiple foreclosures homes are present in the area. This causes many homeowners to lose accrued home equity which can prevent them from qualifying for mortgage refinance to obtain reduced interest rates and lower monthly loan installments.
After the banking crisis, lenders tightened lending regulations which have made it next to impossible for creditors with credit scores below 700 to qualify for home loans or refinancing. Banks cannot afford to take on more non-performing loans or foreclosed properties.
Although there is plenty of gloom and doom speculation regarding the current real estate market, there are still opportunities to buy a house with less than perfect credit. The abundance of bank owned foreclosures has opened the door for buyers to purchase houses well below current market value.
Fannie Mae’s Home Path Mortgage program offers an abundance of bank owned foreclosure real estate. Properties range in price from below $5000 to over $5 million and consist of residential homes, commercial real estate, and vacant land.
Financing for Fannie Mae Home Path properties is available through a variety of local and nationwide lenders. Buyers can take advantage of flexible mortgage terms, low down payment requirements, and bad credit financing options not available through other sources.
The truth of the matter is the real estate market is in a shambles and may continue falling apart for another year or two. But, there are still good real estate deals and financing options available. Anyone considering buying residential or commercial properties need to be a bit more creative than in the past.
It is important to stay abreast of market trends and finance options. Track real estate prices in local markets through Realtor.com. Participate in real estate forums or join investment clubs to network with realtors, mortgage brokers, and investors to learn insider-secrets and real estate buying strategies.
Paying close attention to real estate market trends can help buyers and investors locate distressed properties at discounted prices and stay informed of government home buying programs and tax credits.
National Association of Realtors – www.realtor.org
New York University Stern School of Business – www.stern.nyu.edu
Bloomberg – www.bloomberg.com