A Good Time To Buy

We are in a very opportune buying environment that could be prove to be a great time to find some great deals for the savvy real estate investor. With the drop in property prices and longer days on the market, homes have become much more affordable than they have been in recent years. Throw in the sub-prime problem and the rising foreclosures and you have a dream market for a real estate investor looking to pick up a good deal.

Here is a synopsis of what is shaping the market and why this is might be a great time to buy real estate:

Mortgage industry tightening up (sub-prime meltdown)
The golden days of creative financing are over and a lot of Americans are finally getting slapped with a cold backhand of reality… or what is turning into the sub-prime turmoil. In the heat of the real estate market that was booming in 2004-2005 lenders gave mortgages out like candy, even to people that were taking on debt that they shouldn’t have -- high-risk borrowers with less-than-perfect credit with little or no money for down payments. These are the people that were getting into sub-prime mortgages and most probably didn’t even fully understand what they were getting themselves into. In fact, according to bankrate.com, 3 out of every 10 U.S. homeowners have no idea what type of loan they own… scary.

And guess what? All that predatory lending from a few years ago is finally catching up to the thousands of homeowners that locked into all those sub-prime and adjustable mortgages that are now maturing.

Lots of foreclosures
The slow down in the market in conjunction with the sub-prime meltdown (and other factors) has resulted in rising mortgage delinquency and more and more foreclosures that are expected to continue to rise nationwide throughout the year. In Massachusetts there were 111 foreclosure filings every business day or an increase of 81.97% when comparing the past 12 months to the same period a year earlier (21,644 v. 11,894), according to ForeclosuresMass.com.

In New Hampshire, foreclosures are expected to double from last year.

And this is just the beginning. The Center for Responsible Lending, a nonprofit based in Washington, recently estimated that the approximately 2.2 million subprime loans that were made in the past eight years will end in foreclosure… scary.

Homes staying on the market longer
The cool down in the market is made the most apparent by the stagnant inventory that is taking longer to sell than previous years. As properties are spending more Days On the Market there is, generally, further downward pressure placed on home prices.

My prediction:
We are surely in a buyer’s market (or I should say a buyer’s market for qualified buyers) and there are lots of great opportunities out there but it won’t last forever. All else being equal, if interest rates increase as many experts predict, we will soon move into a very neutral environment that will level the playing field, neither in favor of buyers nor sellers. The upside from the Buy will be best realized in the next several months while enough 'deals' still exist.

In addition, although there a lot of deals out there, ‘flipping homes’ and increases in property values will require longer holding periods before most home buyers realize a healthy profit. So don't watch too much tv and get disilllusioned by the idea of quick a sale.

Labels: massachusetts real estate, new hampshire real estate market, real estate market

posted by B. Samii @ 8:51 AM