Changes on the horizon to bail out the subprime lending bust could have a positive impact for the overall real estate market. Those who are facing foreclosure may be able to keep their home by refinancing. If these homeowners can avoid losing their home to foreclosure , selling below market, or asking for a short sale, this may help stabilize the declining housing market. It will hopefully halt the chain reaction that is caused when homes with little or no equity go to auction and are not bought by investors and then end up going back to the bank as REO's. As the bank's inventory of homes increases, they will need to start selling below market to get rid of them, which has a negative impact on the market value all other homes. By allowing homeowners to refinance and avoid foreclosure, this will keep the bank from having to accumulate properties, which is not their business. Their business is lending money and that is what they want to do!
This is just one facet of a complicated situation that has led to a stagnant and in some areas declining housing market. Although the subprime lending crisis has been a major factor in the turbulent housing market, it is not the only reason for the decline. Uncertainty plays a major role in the demise of the market. With all of the conflicting information out there, Buyers aren't sure if it's the right time to buy and sellers are all trying to get out while the getting is good. Inventory rises and buyer demand dwindles. Let's step back and not be sheep following the herd. What's right for you may not be right for your neighbor, your coworker or the general population.
Contrary to popular belief, your home is not a bank account. Your equity is not a form of savings. This belief system is what gets people into trouble. If you are a Buyer, look at your personal situation and determine if owning a home is right for you. Would you benefit by the tax savings? Would you and your family be happier with a place to call your own? How long do you plan to own your home? Are you feeling crammed like sardines in your current home and would be happier in something more spacious? Would you like to be in a better school district for your children? Owning a home is a personal decision and in general considered a long term investment. Real estate is cyclical. The market goes up, the market goes down. But historically if you buy and hold real estate long term you will benefit from appreciation. Long story short, if you would benefit today by owning a home then do it. If you plan to stay long term with a fixed rate mortgage, what the market does next week, next month or next year won't really affect you. Your appreciation/equity is only realized when you sell.
Also, every market is different. What happens in the Midwest or Texas or Las Vegas or Riverside or Oxnard is not exactly what is happening in your County, City or neighborhood. When you hear or read reports on the housing market always take them in context. More importantly pay closer attention to what's happening in your community. Consult with a professional Realtor to know what is happening in your neighborhood or the neighborhood where you want to live.
We are currently in a Buyer's market. There are a lot of great opportunities out there if now is the right time for you to buy a home. My specialty is negotiations. Why wait until everyone else is ready to buy? Buy when everyone is ready to sell. This is when you can get the best deal!