I'm a firm believer that behind every action, there is a reaction. Many, including myself, have addressed the negative things taking place in the current Mortgage and Real Estate Industries. Certainly, it is splashed all over the media and hard to miss. In this article, I would like to take a different approach and focus on the positives that can be found in the light of negatives in today's Lending and Real Estate Market.
Negative: Less homebuyers are qualifying for home purchases, due to tightening lending guidelines.
Positive: The serious and better qualified home buyers are coming out. That's right! The wishy-washy buyers that wanted 106% financing, going stated income/stated assets with no money in the bank or spotty employment history are all but gone! As a seller, the times of taking your home off the market for 30 days, while wondering how the heck the buyers would qualify are going out the window. Underwriting guidelines are tightening and it will bring with it better qualified buyers that are financially sound and fully capable of purchasing a home. Also, rents and occupancy rates will be increasing. That's right, increasing! If lending guidelines are getting more difficult, a smaller percentage of people will qualify for a home loan. Hence, they need to rent! Investors will be looking at duplexes and multi-family units in today's market, as their potential improves.
Negative: Foreclosure rates are increasing across the Untied States.
Positive: Underwriting guidelines are promoting the once standard guidelines followed to ensure to a great degree that the borrower could actually afford the proposed mortgage payments, in addition to their other living expenses! Certainly, you have seen across the media that the Foreclosure market has increased. At all costs, this is something that should be avoided. The banks are not in the business of taking people's homes and homeowners simply shouldn't be living above and beyond their means. By having a correction, homebuyers will once again be held to standard guidelines that show a person's ability to afford a home to be true and accurate.
Negative: There is an increase of homes on the market, with average days on the market increasing.
Positive: There are some great deals to be found and buyers now have more options than before. It seems like just a few years ago, there were several offers on the table for sellers to entertain and buyers had a limited number of homes available to them on the market. Now that we are in a buyers market, this is a great time for buyers to look at the increasing inventory and "cherry pick" the perfect home desired to meet their family's needs.
Negative: Hundreds of mortgage lenders have closed their doors this year.
Positive: The current mortgage industry is weeding out the "mortgage professionals", looking to "make a quick buck" that held a "get rich quick" mentality." While there are many great people in the lending industry, there were also many misleading or uneducated individuals, giving advice on the average person's largest financial decision! Consumers will now be working with seasoned mortgage professionals that know how to survive in such a market. Across the board, one thing is clear. Many of them are focusing more than ever on customer service.
Scott Gormley
Broker/Owner
Oak Valley Mortgage
2006 Chico Assoc. of Realtors Affiliate Chairman
Direct: 530.592.8362
Fax: 530.267.5555
Website: http://www.CALoan.com
Blog: http://www.CARealEstateBlog.com
"You find the perfect home, we'll find the perfect loan!"
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Scott:
There is always a silver lining to every cloud.