Apr
11
Declining Real Estate Market
Filed Under Real Estate
It probably will not come as a shock to you to hear that we are in the middle of a declining real estate market. Prices of homes are going down across the board. And it is not just a regional thing either. This is a problem occurring nation wide.
One of the main causes of this declining market falls on the simple laws of supply and demand. We have a huge supply of homes for sale. We don’t have a whole lot of people buying homes right now though. Why is this? It is primarily due to the over zealous way lenders were giving away money several years ago. Now that consumers’ rates are changing people can no longer afford their houses. Combine that with the declining job market and the fact that many people who thought they had stable careers are now out of work and you can see why people can no longer afford their monthly mortgage payments.
So the houses go into foreclosure. The bank is then stuck with a house that they loaned more money on then what it is now worth. The bank is now upside down or in a position of negative equity. And the downward spiral continues. It has been a rough ride, but many economists are suggesting that we are near the bottom of this cycle. For all of us that still own homes, let’s hope that these economists are correct!
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Another problem that home owners have, besides the threat of foreclosure, it the loss of equity in their home. At the moment it seems that home owners are losing out everywhere.