Foreclosure Crisis Means A Buyers Market
March 16th, 2008 by Ana
My mother used to say, “Every cloud has its silver lining.” My mom can be described as the eternal optimist. While I may pride myself on a well-cultivated cynacism, sometimes Mom’s influence shines through. The current foreclosure and real estate and mousing and mortgage crises are a good example of that.
While I am out delivering pizzas on the weekends, I have an ulterior motive: I am neighborhood-hunting. Not as specific as house-hunting, but I am keeping my eyes open for a neighborhood and general area I would like to move to in the next two to five years. Believe me, delivering pizza is perhaps the best way to scout out places to live!
My little city has been lagging far behind the national trend in home prices, with new construction still popping up almost weekly. It was also lagging behind in the run-up, so I am figuring the market will deflate in another year or two. That will be the perfect time for me to buy, as it gives me plenty of opportunity to save up a 20% down payment and do the whole mortgage idea right (and finish college also).
I’ve met a few wealthy grey-haired (or no-haired) folks who claim they made their best real estate deals back in the late 70s and early 80s. That was a bad time for real estate, my parents used to say. The wealthy ones disagreed: it was true buyers’ market and the best deals could be had if you had the cash. It’s going to be the same story very soon.
Let’s take Cleveland real estate as an example: since Cleveland (Ohio) practically led the pack nation-wide on the foreclosure trend. I’ve met a real estate agent from Cleveland on a blogging board, and have to confess she rivals my mother when it comes to optimism. She is happily telling folks that now is the perfect time to be buying a house up in Cleveland, since it is a serious buyers’ market in the wake of all the foreclosures.
Ok, so why am I reading a Cleveland real estate blog? No way am I moving back up north! I happen to enjoy her commentary and wit on subjects where politics, real estate, and finance tend to converge. Oh yeah, and she has great tips for buying a home, getting ready for a mortgage (something I haven’t done since 2001), and she must have that serious bargain shopper gene that is hardcoded on my X chromosomes also, because she just bubbles over at the idea of this being a perfect buyers’ market.
Oh yeah, my kind of buyers’ agent. Now, if I could just make up my mind which neighborhood I’ll want to move to in a couple years … because it will be a buyers’ market down here by that time.
Posted in mortgages |
March 17th, 2008 at 10:33 am
I’ve been watching what has been going on over your side of the pond and trying to work out what is happening with properties and mortgages over in the UK.
Last I heard was that Bear Stearn was about to be snapped up by JP Morgan. Has this now happened?
In the UK one of our top mortgage lenders has just been nationalised. Northern Rock has not been able to get access to wholesale money and couldn’t meet its liabilities.
The UK market is a bit different to the USA in as much as there is a shortaage of land and properties so prices are expected to hold or not fall back too far.
Property investors are keeping a beady eye open for distressed sellers ie people who can’t meet their mortgage payments. In some cases, they buy the property cheap and then let the same property out as landlords to the people who used to own it.
One things for certain I don’t think we have seen the end of this credit crunch as yet.
Best wishes
Steve
March 18th, 2008 at 9:58 am
Finally, somebody who ‘get it’ … hope you are buying up big (or, at least gearing up to do so)? As well as telling all and sundry on my blog and elsewhere, I have been busy cashing up to take advantage of:
1. Real-estate bargains, and
2. Historically low mortgage interest rates
Can you remember a time when these happened at the same time?! Neither can I …
Couple of hints, though:
1. Avoid foreclosures and auction sales (too tricky … not enough due diligence); instead buy pre-foreclosure, for sale by (desperate and poorly represented) owner, or bank-owned.
2. LOCK IN you interest rates for as long as possible (30+ years, if you can).
3. Live in the property or rent out … buy more if you can afford the payments … and wait.
There is a saying: when the market is down and people are jumping off ledges… the little old men with canes and bowler hats are quietly buying everything they can!
March 18th, 2008 at 10:05 am
AJC, I am definitely hoping to snap up a pre-foreclosure
It’s a win-win situation: I get a great deal and someone escapes a bad situation. However, I don’t plan to carry a long martgage: my goal is to live in a paid for home and invest what should be my house note!
April 6th, 2008 at 10:05 pm
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