Real Estate prices hit their peak some time in 2006. Since that time, the real estate market has been getting battered like a ship in a hurricane. An alarming increase in foreclosures in 2006 and 2007 led to the collapse of the market for subprime mortgages in 2008. While foreclosure rates are not where they were in 2007, they have still have not yet bottomed out. A low demand for housing relative to the supply is a warning sign for investors that the market may continue to drop for many more years.
There are signs that buyers and sellers are coming to grips with the new realities of real estate investments. Statistics are showing that homes are now selling on average at 90% to 95% of their initial asking prices. That means that home sellers and real estate agents have gained a much better understanding of the marketplace. Buyers as well are realizing that they can no longer low ball home sellers, as sellers are now preparing themselves for a long process rather than a quick sale.
Many experts believe that the national housing crisis was really a series of local crises instead. The former Federal Reserve Chairman Alas Greenspan believes that the crisis was caused by the bursting of several local real estate bubbles, not a national bubble. And some parts of the US were definitely scorched worse than others. Recent devastating problems with the US auto industry have decimated the markets in Detroit and Grand Rapids, MI. Las Vegas and Reno, whose economies rely on tourism and gambling, have also taken a severe downturn. South Florida was hit particularly hard. And California, with its myriad of economic problems, has also been particularly hard hit.
Other areas of the country are doing much better. North Dakota, for example, has great opportunities for buying and selling properties. The cost of ownership is low in this state, as is the unemployment rate. The markets in New Hampshire and Minnesota are also faring better than the national average.
People differ as to the reason for the crisis. The rise of the adjustable rate mortgage after The Gramm Leach Bliley Act of 1999 definitely deserves some of the blame. Many people blame government mandated lending and organizations like Fannie Mae and Freddie Mac for the problem. Surely, however, a crisis this deep has more than just one cause.
Commercial real estate does seem to be gradually improving due to more apartment buildings being built. South Florida housing is also experiencing a bit of a renaissance as foreign investors buy up available properties with cash.
Bad mortgages continue to infect the market, and there is sure to be more foreclosures on the horizon. But, with the rate for a 30 year fixed mortgage holding steady at below 5%, now could be a good time to take advantage of a down market. However, it is best to check with the lender with regards to your eligibility for this type of mortgage.
If you are going to enter the real estate market now, do so carefully. Low rates and some good markets in certain areas of the country could mean that you will find a really good deal at a time when most people are still pessimistic about the future of real estate investing.
Aspiring home buyers, check out our website to learn everything there is to know about the Boise real estate market, now. You can also find information about a real estate agent who specializes in Boise homes, today.
