The housing market has experienced some drastic changes this decade. The present market has experienced drastic price declines from Condos in California to Homes for Sale in Arlington Texas . The number of houses and condos for sale in major areas is at record highs, and we are seeing more foreclosures per capita in history.
The reason we’re seeing these abrupt market conditions is because mortgage regulations became too lenient. Buyers who shouldn’t have ever gotten mortgages, got them. Another factor that promoted to the real estate mess was that mortgage interest rates dropped to the lowest rate ever, and borrowers could now purchase more home for the same monthly payment. More people were able to buy, and demand for housing saw dramatic increases. Supply couldn’t keep up with demand, and prices went up. And up. And up. Real Estate was now not affordable to the average American, so alternative mortgage products were introduced to help more people who couldn’t afford homes, to purchase real estate anyways.
Meanwhile, all the appreciation in prices spurred a real estate investing boom like no other. Some cities saw nearly half the real estate being purchased by investors. They flipped these properties for huge profits. Overall the economy boomed, people borrowed against their increased home values, spent the money, and all was well. But the problem was that this real estate growth was created by artificial, irregular forces. People weren’t buying the homes for shelter, they bought them because they wanted to get rich.
Everything changed. Housing became too unaffordable and people couldn’t buy at all. The economy stalled, and borrowers started missing payments on the homes they never should have purchased. Then the overallThe credit market crumbled. Banks failed, and the White House has stepped in to compensate for the effects that loose regulations created.
Now interest rates are again unrealistically low, but this isn’t fixing the problem because people still fear buying real estate right now, and because it is not nearly as easy to get mortgage loans like before.
The number of homes for sale is high, and there are more homes for sale than imaginable. But, some real estate markets are on the verge of shifting. They’ve bottomed out. Inventory will go down, and prices will rise again.
