In the month of September Real Capital Analytics Inc, a research firm from New York, calculated that the US economy, by default, foreclosed properties and restructuring of debt, lost to the tune of $138Â million, primarily due to the worldwide credit crisis. Different banks that were still waiting in the wings and reluctant to foreclose the properties due to repayment irregularities or delinquency are starting to act and enforce foreclosures. This should see the foreclosure rates soar even higher. Higher foreclosure rates will see a lot of good properties coming into the market at lower than expected prices. This is going to pull the prices of the properties further down.
The current rate of employment is at 11 percent, which is going to increase. This impacts the repayment schedule of the many homeowners as they continue to battle the economic slow down. Most have had to give up this stretch and ask for foreclosure. Many have gone into the loan restructuring programs, which donâ€™t always succeed since the cash inflow has just dried up, resulting in these individuals turning delinquent. With the repayments not coming through and no scope of the situation improving in the near future, the banks, though reluctant, have to look at foreclosure. Many have lost their homes in this nightmare.
While it is a hard boil for some, others have been waiting with their cash for the right time. Some with good savings and strong financial profiles should find this situation to their advantage, since many really attractive properties are hitting the market. The other good news is the fact that the mortgage rates have reduced from the last month of 5.3 to 5 percent in 30-year fixed term; this is much lower that last yearâ€™s rates of 6.3 percent.
Overall, the real estate prices have reduced by 41 percent when compared to October 2007. In essence, the demand has really gone down, and as in any market, the demand dictates the price. Therefore, it could well be the time some investors were waiting for.