« The Principles Of Real Estate Investing | Home | Condos Listing In The 21st Century »
Home Sales Realize Quick Decline
By Vic Hurlstorm | August 19, 2010
Today we are talking about home sales, in particular national statistics. We do not typically care too much about national figures. It is essential that you go look at your area numbers because real estate is a local industry. Nevertheless, sometimes the figures are so inconceivable that they have to be brought to your attention.
According to the National Association of Realtors, pending property sales fell 30% in May from where they were in April. Granted, April was the end of the tax credit deadline. So that had some effect on the situation. We do not quite know what has happened from May to June.
Kevin and Fred were foretelling that this would happen as much as a year ago. In essence, we have been borrowing buyers from the future. With the incentive tax credit offered by the government, plenty of people resolved to buy properties earlier than they would have.
This is just like what happened in the first half of the decade. The banks were lending money to about everyone that wanted it. Buyers that weren’t necessarily qualified or weren’t prepared to acquire a property stepped forward and purchased properties. So, in both cases, there is going to be a lag time before house sales catch up.
The biggest parts of this dilemma are inventory and house prices. Because sales are despondent and inventory is going to amplify, prices will absolutely dive.
With adjustable rate mortgages and their imminent resets, house owners will be taking a closer look at their mortgage and the property value. For some the payment will go down, but so will the value of their property. There is a great potential for an increase in strategic default. We haven’t seen the worst of defaults, unemployment and short sales. The nastiest is yet to arrive.
We’ve had all of this feel good news with the last couple months of sales and pulling buyers from the future. We will be in a worse position from a nationwide standpoint than we ever were in 2007.
Get powered up by Kevin and Fred at Short Sale Power Hour by the Short Sale Specialists of Arizona
Topics: Foreclosures | Comments Off
Comments are closed.