How is the Mortgage meltdown affecting my home prices?

By
Real Estate Agent with Total Web Services

The current mortgage meltdown has the potiential to affect everybody's home prices. The reason for this is that mortgages are getting harder to find. In the recent past, a mortgage was really easy to get. If you had a job, a pulse, and a little bit of money, you could get a mortgage on a home. Because of this, anybody could buy a home. With so many home buyers out there, basic supply and demand rules existed. There was more demand for homes then the supply. As a result, home prices soared. Everybody that owned a home already, decided to move up. It was easy to do because the typical home sold within a few weeks. Sometime within a few days, often for asking price or higher. Almost everybody was on the bandwagon. People in the large luxury homes decided to downsize so the cycle was active and fast paced. People often bought more house then they could afford, and appraisers were writing appraisals for whatever was need to make the "deal" go through. The folks who could not afford the home, did some fancy financing, including obtaining mortgages with an ARM which would start out with a very low interest rate, then in a few years escalate into a higher interest rate. Or they would obtain and intrest only loan which would become interest and principle in a few years. Well a few years have gone by, and now they can not afford the payments. Foreclosures are increasing at a rapid rate. For every foreclosure in a neighborhood, you can expect the home prices to decline by about 10% or more. Back to supply and demand. More supply, lower demand, prices go down. Mortgages are harder to get. Now you need good credit, a good job, and much more for a down payment. This cuts a lot of the potiential home buyers out of the market.

For good reading, see CNN Money, Real estate section.

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the flag to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Location:
Pennsylvania Montgomery County
Tags:
real estate
mortgage meltdown
home prices
home sales
mortgages

Comments 10 New Comment

Anonymous
Post a Comment
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the tag to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Rainmaker
1,489,843
John Novak
Henderson, Las Vegas and Summerlin Real Estate
Keller Williams Realty The Marketplace
Welcome to ActiveRain, Juliet, from a fellow KW agent! Good explanation of how changes in the mortgage market are affecting both buyers and sellers. I admire your thoroughness with clients to be sure that it's not just a home they can afford, but a sound financial decision. We need more agents like that.
September 14, 2007 10:12 PM
Rainer
3,445
Juliet Lindrooth
Total Web Services

Thanks John,

I wish at this time with the mortgage problems and foreclosure problems, everybody would link about what they could afford, rather then what they can buy. If every Realtor out there would advise their clients about that, I think there would be less foreclosures on the market today.

Are we not supposed to be looking out for the clients best interest or our own? It's time we police our own, even if we make a little less for now, the payoff is in the future with a stronger market, more qualified buyers, and referrals, referrals, referrals.

September 15, 2007 09:31 PM
Anonymous #8
Anonymous
mr jones
Your views are dead-on, but its a SALES career, selling houses...Just find motivated buyers and sellers and don't be such a downer.
February 28, 2008 10:21 PM
Rainer
3,445
Juliet Lindrooth
Total Web Services

mr jones,

Finding a motivated buyer is not the total answer. The Motivated buyer needs to be able to buy the house one of two ways. Cash or financing. If mr buyer is broke, jobless and has bad credit all the motivation in the world is not going to get him a house. So if there are motivated buyers out there that can not qualify for a cash purchase or financing, having a motivated seller will not help.

This is a sales career, but hopefully you are not one of the dishonest brokers/agents that are only chasing the short term commission. For an agent or broker to have long term sucess, relationships are key. Understanding the larger economics at work and then educating your client will help your business in the long run.

When people ask me now if it is a good time to buy my answer is YES. If you can qualify for a mortgage or have cash (lots of people do. it's not in the stock market right now ) then it is a great time to buy.

Great investing advice. Buy high, sell low, make it up in volume. (a joke of course). But if you get it, then you will understand why over the next few years is a good time to load up on some cheap real estate.

But sellers have to understand why thier house is not worth what they paid for it just 3 years ago. So if you have cash, or a good job and good credit, start building your porfolio now. But we still have a duty to educate. If you are not doing that and just chasing the dollar, in the end your reputation will be in the dirt.

So go ahead,  flame others for telling the truth and lets see where you are when prices start going up.    

 

 

February 29, 2008 08:53 AM
Rainer
1,930
Aron Bailey Bruser
Win-Win Home Staging & Redesign

Julliet, this was a great explaination of the 2007 mortgage meltdown and insightful to me.  I see that you really take the time to respond to other's comments.  You really put your heart into your work.  It is a pleasure and joy getting both getting to know you and working with you.

March 13, 2009 01:45 PM
Anonymous
Post a Comment
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the scissors to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Rainer
3,445

Juliet Lindrooth

Ask me a question
*
*
*
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the envelope to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Additional Information

Updated and active Real Estate issues that affect our Real Estate world. From Mortgages, title, Advertising, SEO, Websites, Marketing, what works and does not work, and any other issues that I think are relavant to our world of business.