It is a changing real estate market we’re living through. Almost every state is experiencing pricing declines, from SLC UT Real Estate to Richmond Virginia Homes . Housing inventory is at all time highs, and the frequency of US foreclosures is awful.
The reason we’re seeing these drastic market shifts is because financing guidelines became too lenient. People who shouldn’t have ever gotten mortgages, got them. Also, interest rates fell to the lowest rate ever, and buyers could now also afford more house. More Americans were able to purchase real estate, and demand for housing skyrocketed. The amount of available homes didn’t keep pace with the number of new buyers, and real estate values skyrocketed Real Estate was now not affordable to an average American, and more creative mortgage products were introduced to help more people who couldn’t afford mortgages, to buy real estate anyways.
This appreciation of real estate values spurred real estate investor speculation than ever before. Some cities saw more than 50% of the houses being purchased by real estate investors. They flipped these properties for large profits. The economy exploded, people took out home equity loans, indulged, and all was well. The problem was that this housing growth was created by unreal, irregular causes. People weren’t buying the homes for shelter, they bought them as investments.
Then reality hit. Housing was too expensive and people couldn’t afford to buy at all. The economy started to slow, and borrowers started neglecting payments on the houses they never should have bought. Then the overallThe credit market collapsed. The economy slowed, and government has stepped in to try and right the ship that loose regulations created.
The Feds efforts to stop a recession have put the market in a situation where interest rates are again at historic lows, but this isn’t fixing the problem because people still fear buying homes right now, and because it’s so much more difficult to obtain real estate financing as it used to be.
Inventory is up, and there are more homes for sale than imaginable. But, some markets are on the verge of shifting. They’ve bottomed out. Inventory will go down, and real estate values will start going up again.