Before the real estate market crash of 2008, there were the prophets. They spoke of a real estate balloon that was bound to burst and take down the real estate market as well as the economy. Even with all of this prophesying, many were taken by surprise when the once lucrative real estate market began to crumble.
So, what caused the collapse? The main culprit was the subprime lending market. When this market crashed, a large amount of companies faced foreclosure. Even the companies that did not foreclose suffered losses that amounted to billions of dollars.
You may have already heard news reports about the subprime market crash. If you are like most, however, you may not know what the crash meant to individual property owners. You may even have questions regarding how we got in this situation to begin with.
Over the past few years, subprime mortgages were the biggest trend in real estate lending. Buyers who were unable to qualify for conventional mortgages could obtain financing via a subprime mortgage. People who obtained these loans often had to pay high interest rates.
Lenders obtained the money to pay for these mortgages from a variety of sources. Many companies secured loans at low interest rates and then loaned that money out to buyers at a higher rate. Some of the money was borrowed from central banks.
While the housing market remained relatively stable, the ill consequences of these loans could not be seen clearly. In fact, the market was experiencing a surge in value that was unprecedented. This surge resulted in an unrealistic expectation of the future real estate market which in turn caused lenders to put even more money into funding mortgages that new homeowners could ill afford.
In 2005 and 2006, the last real boom was occurring in the real estate market. During this time, it was extremely easy to get a loan. Lenders thought that they would be able to make money from buyers even if they did not pay for the mortgage through the high interest rates they were charging and the ever-increasing value of real estate. But when interest rates started to rise, people stopped buying homes. Additionally, homeowners started failing to make payments due to the interest rate spike.
It became harder and harder for lenders to obtain funds to invest into mortgages. Buyers, now unable to qualify for a loan easily, began to stop looking for a home to purchase. Investors became wary, and underwriters started increasing the requirements to qualify for a loan. People who had adjustable rate mortgages sought desperately to decrease their skyrocketing monthly payments. But they could not qualify for a new, fixed loan under the strict guidelines. This only caused the number of foreclosures to rise dramatically resulting in the real estate market crash of 2008
Archive for ◊ October, 2010 ◊
Phoenix and the surrounding areas of Scottsdale, Glendale and Mesa have plenty of houses and real estate available to buyers at very attractive prices. This is largely due to the economy, and the foreclosures that have been caused because of it.
While foreclosure is certainly not something that any homeowner wishes to go through, it many cases it cannot be avoided. Phoenix Arizona real estate agents have many homes and property available that are priced at only a fraction of what buyers would have paid two years ago. Lower priced homes have piqued the interest of those looking to buy a home, especially people in the lower income range.
Many people love to purchase older homes or homes that need repairs. These “fixer-uppers” are a gold mine for many, especially now. Buyers can purchase these types of homes at a huge bargain, fix them up, and sell them for a very nice profit.
What about real estate investors? Things are great for them as well. If you invest in real estate, there is no better time than right now to buy. Your Phoenix realtor can show you where the desirable properties are located, and keep tabs for you on any that may become available.
Of course, no matter where you choose to buy you want to know about the area. You will want to know the average value of the homes in the area you are considering, as well as information about schools, security, etc. A well seasoned and experienced real estate agent can give you all the information you need to make an informed decision, and answer any questions you may have.
Another great thing about discussing your needs with an agent who has many years in the business is their knowledge. You can inform them of the price range you need, what type of home you are looking for, and give them other important details. Their familiarity with the properties and the area will enable them to locate the perfect home or property for you quickly.
Avoid the hassles of trying to locate the perfect home or property on your own. Contact a Phoenix realtor who has a solid background in the business, and let them handle the hard work for you! There has never been a better time to get a home for your family, or invest in property. Do it now, while rock bottom prices still reign.