Just when homeowners thought things could not get much worse, CNNMoney reports that although homes are already “a third off their highs”, we may see even more substantial discounts this summer.
Pete Flint, CEO of Trulia Real Estate, claims that this summer may become a “summer clearance sale.” Due to the cautiousness of homebuyers and sellers who need to sell and who are willing to lower prices even further to motivate buyers to take the home buying plunge.
Pete Flint added, “We don’t imagine a stampede of buyers, like outside of Macy’s on Black Friday,” he said. “We see this more akin to January sales where retailers are trying to get rid of stock before it gets stale.”
So what else could accelerate the “summer clearance sale”. CNNMoney claims that home prices have already neared levels not seen since 2002, and sellers realize that the prices may not have bottomed-out. Now with the accelerating price drops, sellers are concerned that the home prices may not have reached the bottom, and homes may continue to depreciate.
One of the biggest factors affecting the tight housing market is tight credit. Home buyers frequently need at least 3 to 20% for a down payment. Can you get a zero down loan home loan, maybe, but you will need excellent credit, and you will pay a lot for the option. This means that if you borrow over 80% of the home’s value you will have to pay for private mortgage insurance which is charged to protect the lender if you default on your mortgage. PMI can add as much as 0.5% to 1% of the loan value. This could be as much as $5,000 on a $500,000 home. Keep in mind, PMI will not help reduce your principle payment or your interest charges.
Not only is tight credit an issue, real estate markets are bloated with homes. In many states the homes are foreclosed properties, distressed properties or short sales and they may already be substantially discounted. In many markets it is estimated that there may be a 6 to 8 month inventory of homes waiting to be sold.
The final reason the housing market has declined is unemployment. Unemployment rates have risen to above 9%, eliminating many potential homebuyers from the market. The unemployed are do not purchase homes and many others who fear they may be laid-off next will stay in their current home or postpone any major purchases, including a home purchase.
All these factors could affect the home buying activities of the summer. Summer has traditionally been a popular time to relocate, allowing families with young children to relocate prior to the new school year. Flint concludes, “By the end of the home buying season, sellers will become increasingly desperate.”
So what should you do? Experts predict that home prices may continue to fall through 2011. Michael Larson, a housing analyst for Weiss Research predicts, “There will be a lousy housing market for another year or two.”
So the advice may be to wait to sell your home if you can. Many people have also opted to rent. Renting offers little risk and may allow you time to save a substantial down payment if you wish to own a home in the future.
Hiring a Bankruptcy Lawyer
So what if you own a home and you are facing foreclosure? Filing for bankruptcy protection may be able to stop home foreclosure, wage garnishments, bank account levies and property repossessions. Do not let the bank take your home without finding out your options. Bankruptcy lawyers understand bankruptcy laws and can review your financial situation and determine if filing for bankruptcy is the right solution for you.
Latest posts by Beth (see all)
So what if you own a home and you are facing foreclosure? Filing for bankruptcy protection may be able to stop home foreclosure, wage garnishments, bank account levies and property repossessions.
Do not let the bank take your home without finding out your options. Bankruptcy lawyers understand bankruptcy laws and can review your financial situation and determine if filing for bankruptcy is the right solution for you.