The United States Foreclosure Fiasco

By: Brian G Krassenstein

Why The United States Housing Market is in Such Bad Shape

Ever since the end of 2005, the US housing market has been in one of its worse slumps in ages. Experts predicted a turnaround initially sometime in mid to late 2007, but those same experts are now predicting the slump to sustain itself, and possibly worsen all throughout '08 and maybe even '09.

Is this an Invesors Opportunity to Cash In?

- Yes it is an investment opportunity, but in my opinion not quite yet. Wait until the summer of 2008, and then begin finding the good deals. Whether in vacant land or a house, there will be an opportunity. If you have the cash and credit to purchase some, there should be some real nice returns 3-4 years down the road.

What are the causes of this Fiasco?

- Foreclosures have simply overloaded the supply side of the equation. As more people are forced to sell in order to avoid foreclosures, and more actual foreclosures occur, the supply of homes have sky rocketed. When supply is greater than demand prices will fall, and often quite dramatically if nothing is in place to stop the fall.

- The bubble did in fact burst. Home prices were rising faster then demand really did. Only so many people can afford paying the prices that most homes were going for back in 2005. Home values had nearly doubled from 1998 to 2005, while salaries and savings went up only eight to nine percent.

How much longer will it last?

- Most experts expect that by 2011 the market will correct itself. Everything depends on, interest rates, the United States economy, whether we have a recession, and value of the dollar. If you have a fixed rate mortgage or own your home outright, then there isn't anything to worry about. Just stay put and in a few years you will be able to sell for a good price. If however you have an adjustable rate mortgage, and can't afford the new payments for the next 2-3 years, there isn't much help you can get. Until the value of homes start climbing, it will be almost impossible to find a good fixed rate mortgage, unless your credit score is superb.

In conclusion, if you have the ability to stick it out, try your best to and do just that, as financially speaking, you will be in a much better situation in three years or so. Those who panic sell without needed to will be mad at themselves com 2011.

Foreclosures
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