Buying Homes in a Falling Market
Real estate markets across the United States have been south bound for over 3 years now. Fewer markets have experienced an occasional spurt in prices without sustainable momentum.
So far the beginning of 2012 appears too early to predict a reversal of the current trend and the numbers that are put out by several research agencies point out that a large number of homes remain unsold across the nation.
With mortgage lenders likely to add a significantly larger number of homes to the foreclosure list, the best that can be expected is some stability at the current levels. Serious buyers, though they are fewer, are also facing difficulties in obtaining fresh mortgage loans because the lenders have made substantial changes to their lending plans.
A 20% down payment has now become the rule with many lenders. Your credit history over a long period of time and not just the immediate credit scores also add to the list of hurdles to be crossed before you can get a mortgage loan. Put, together, if you have decided to buy a home, let us examine how you can get the best out of the current situation.
Though the chips are down across the nation and most prominent markets around the globe, real estate is driven more by local factors than the global or national indicators. Therefore, if you are buying into a neighborhood where prices have shown a steady rise in the last couple of years (after hitting the bottom in early 2009), your investment has better chances of appreciation in the immediate as well as long term.
In markets which have an inherent strength, the cause of the dip is only a reflection of the sentiments across the broader national spectrum. In these markets, you will be guided by the general economic conditions prevailing in the neighborhood, employment statistics, and the overall growth prospects.
In early 2009 most markets reacted sharply to the economic down turn taking real estate prices down. However, in some markets with potential buoyancy, the reaction was short lived and priced started moving up in a short space of time. One way you can amplify this picture is by looking at the price graph between 2009 and the current times. In markets where the prices have moved up continuously, you have minimal concerns because of the inherent value in these markets.
Buying homes in a depressed market is sharply different from buying homes in a strong market. The first step in such markets would be to examine the price movement to gauge whether the market has bottomed out or the trends holds further potential to go down. When the price graph shows up and down waves, there is an element of inherent strength in the market.
These markets have a strong potential to consolidate and move up when the national economy offer even small consolations and exhibits signs of improvement. Your task becomes tougher when your chosen location falls in a market that is perpetually moving south. Buying homes in these markets call for in-depth analysis and understanding of multiple factors that influence the price movements.
Your best bet to buy homes in a depressed market is to identify a reliable agent conversant with the neighborhood in which you propose to buy your home. With long years of experience in a specific neighborhood your agent is in a better position to guide you through an informed investment decision and help you get the best of homes, at a price point that is advantageous to you.