Have you ever bought a new car and realize the moment you drove it off the parking lot the value of the car plummeted? Unfortunately, used homes are also depreciating in value.
According to the S&P/Case-Sciller index of home values in 20 U.S. Cities, home prices slid by 3.6 percent in the first quarter of 2011, the lowest prices since 2003. The sell prices in the study included pre-owned homes that have been compared to other pre-owned homes sold. Comparing new home pricing is a different matter.
Given the current housing crisis, there is a glut of pre-owned homes competing with new homes. Many previous homeowners can rent the newer and larger homes for about half of what is owed on their mortgage loans.
The value of homes are susceptible to economic downturns, including new homes. If the majority of people cannot afford new homes, new home sales plummet. The moment a homeowner closes on a new home, the home then becomes pre-owned, and the value of the new home decreases. Is there any wonder people are getting upside down on their loans, especially if they just borrowed money for a new home? How long will the current housing crisis last? Will Americans view purchasing a home like purchasing a vehicle and expect the home to depreciate? What happens if you have purchased a home and the value of your loan is worth more than your home?
If you have borrowed more money than the value of your home, if you face a financial crisis, you may be unable to pay your mortgage, which can lead to bankruptcy and foreclosure.
If you are facing foreclosure and are considering filing for bankruptcy protection, you may need help from a bankruptcy lawyer. If you need relief from the stress of debt and you live in or around the metropolitan area of Springfield, Massachusetts, contact us at www.betterbankruptcy.com. We will help you find a bankruptcy attorney in your area who will answer your bankruptcy questions.
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