"Come to my web." said the spider to the fly. I know that I am asking for trouble writing about this mortgage crisis and for the first time, I am REALLY looking forward to input from as many people as possible.... Here's how I understand the mortgage crisis and why it directly affects the real estate market....
1. Crazy loans are made and EVERYONE qualifies.
2. Because everyone qualifies, (with practically nothing down) prices SOAR.
3. People begin falling behind in their payments... or figure out they can't afford the mortgage payments.
4. People begin to sell to get out of the debt.
5. Lots of people can't sell and go into foreclosure.
6. The market gets flooded with homes to sell
7. Prices DROP.
8. Lenders tighten their restrictions on obtaining financing.
9. Less people can qualify for mortgages. So, less people can buy (despite falling prices).
10. Even less buyers equates to further price declines.
11. Insurance companies (who insure mortgages) won't insure mortgages in "declining" markets.
12. Without insurance, even LESS mortgages are being approved. Mainly because most of the markets are declining.
13. The only people who qualify for mortgages are those with substancial down payments. (20% or more)
14. The economy as a whole is in a recession which means people have less money and therefore can't come up with the down payment.
15. Prices continue to drop. and drop. and drop.
My take on this is that prices will continue to drop until the banks have gotten rid of the majority of their inventory and until average home buyers can afford to make their down payments to purchase. I know that there are still loan programs out there such as FHA and private lending that are allowing people to purchase, but it just seems like too little too late.....
The lenders need to loosen up their restrictions just a little bit. Write conservative loans but allow a little less downpayment or something.... It seems that you have to be an angel to get a mortgage these days!
Opinions?????
Bryce Fuller is a professional Realtor with RE/MAX North in Northbrook, IL. He can be reached via email at Bryce@TheFullerForce.com or on the web at http://www.thefullerforce.com/. His real estate concentration is in Northbrook, Illinois, Glenview, Illinois, and Deerfield, Illinois. All of these communities are on the West Side of the North Shore of Chicago. He has over 5 years of experience selling single family homes and houses, condos, townhomes, townhouses, condominiums, and investment real estate in this and the surrounding areas. If you or someone you know is looking for a professional realtor to buy or sell residential real estate, please contact Bryce today. He works on a team with his wife Lori Fuller, and his Mother, Connie Fuller. They are affectionately known as "The Fuller Force" at RE/MAX North. Visit "The Fuller Force" on the web today at http://www.thefullerforce.com/. Other communities that "The Fuller Force" serves include Glencoe, Morton Grove, Skokie, Wheeling, Buffalo Grove, Palatine, Arlington Heights, Prospect Heights, Mount Prospect, Highland Park, Lincolnshire, Vernon Hills, Libertyville, Kenilworth, Winnetka, Wilmette and Des Plaines. If you or someone you know is interested in knowing the market value of property in any of these communities, contact Bryce today! You can read his Blog at www.activerain.com/blogs/cbrycefuller.
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It will get worse before it get better. The guidelines are there now that make it difficult at best. Look at more FHA and Government loans for now.