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How will the Real Estate Market Fare in 2008?
Many homeowners are looking at the current real estate market and wondering how much worse the crash will become before it actually begins to improve. Given the fact that the real estate market in the last year has been the worst year in several years for sales, it is little wonder that consumers are so concerned. Default rates rose significantly while the prices of homes fell sharply. In addition, the rate of home ownership began to drop as more first-time homeowners were frozen out of the market. To make matters worse foreclosures soared dramatically and mortgage brokerages began to file for bankruptcy. If you are like many consumers you too may be wondering how much worse it will become.
Recent statistics indicate that housing prices will likely drop further this year before they begin to improve. One of the reasons for this is the fact that credit is still experiencing difficulties while interest rates have not improved either. One of the biggest concerns about the market in the coming months is commercial real estate. Many experts believe that commercial real estate will continue to soften throughout 2008 including shopping centers, offices and apartment buildings. Slower economic expansion could result in higher rates, thus triggering the continued softening of the commercial real estate market.
Many feel that the relief from the real estate market will not be achieved soon, at least not in the coming months. The inventory of homes currently on the market has continued to grow in the past months. As a result, this inventory will need to be handled before stability can occur for the overall market. According to the U. Census Bureau the rate of homes in the United States there were vacant and for sale during the last months of 2007 was higher than it had been since 1965. It is anticipated that the demand for housing will remain lower, thus impacting housing prices. High risk buyers who would have been able to qualify for subprime loans in the past have now discovered they are locked out of the market, thus unable to provide any immediate relief. Furthermore, even buyers who are able to qualify according to the credit but who do not have a large amount for down payments may also discover it remains difficult to become approved for mortgage loans. While residential markets throughout the United States have been hit hard, Florida seems to be suffering more than many others.
Part of the reason for this is the fact that literally thousands of condominiums that were under construction are anticipated to be completed this year. In many cases, deposits have already been placed on these units; however, there is some concern that property value drops and the tightening credit situation will give buyers reason to be concerned and perhaps even back out. In the event a large number of buyers back out of those units, this could cause a serious problem with construction loan defaults in this market. California has also suffered as buyers who struggled to take out risky loans in order to purchase homes with soaring property values in the past few years discover they are no longer able to meet their housing payments. In many cases, selling those homes now is difficult as property values drop and mortgage payments rise. While the news certainly may appear to be grim, there is some silver lining to those dark clouds. It appears that the housing market could well bottom out in 2008. This is actually good news because the market must bottom out before it can begin the climb back to the top. Word Count 609 PPPPP .
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