| The housing pendulum has swung in the other | | | | now, buyers have the upper hand. They have |
| direction and created a tough real estate | | | | more choices than ever. |
| market for sellers. And home buyers are | | | | |
| feeling the effects of tighter mortgage | | | | And this brings us to the root of today's |
| qualification. What will happen now? | | | | housing market woes. For sellers, the |
| | | | pressure from more homes coming on the |
| The Real Estate Pit And The Mortgage Pendulum | | | | market, exacerbated by the sub-prime |
| | | | complexities, will force them to lower prices |
| What horrors await home sellers in the | | | | if they have no choice but to sell. Home |
| dungeons of the housing slump? | | | | sellers will also have to wait even longer |
| | | | for their home to sell. I have seen sellers |
| News headlines bombard us daily about the | | | | who just break even on the sale of their |
| plight of the real estate market and it's | | | | homes and some make very little profit, |
| wide reaching effects on the economy. You've | | | | depending on how long they have owned their |
| read the stories of record numbers of | | | | home. There are way fewer home buyers these |
| foreclosures, the sub-prime mortgage fiasco, | | | | days. There is more about this at a website |
| and declining home prices and sales. There is | | | | with free information and resources that is |
| even talk of a recession. | | | | helpful to both buyers and sellers. |
| | | | |
| What we all need to remember, however, is | | | | For home buyers it may seem that this is |
| that most news reports that you read are | | | | their heyday and super bargains are in the |
| based on national housing information. As you | | | | offing. To some perhaps, but to many, the |
| may know, real estate is local and not every | | | | mortgage pendulum is severing their ability |
| area of the country experiences what is | | | | to qualify for a mortgage that would have |
| presented by governments, associations, and | | | | been readily available to them prior to |
| media. Although it is true that the housing | | | | current day, preventing them from buying a |
| market is in trouble just about everywhere in | | | | house or qualifying for refinancing. |
| the country, the severity of conditions vary | | | | |
| by area. | | | | Although the Fed has made a big cut in |
| | | | interest rates and President Bush has |
| Out here in the trenches of Richmond va real | | | | approved the bailout of certain foreclosure |
| estate and surrounding counties, which can be | | | | situations, there is still one part of the |
| considered typical of many areas, we have | | | | equation that is keeping the housing market |
| seen home prices fall and properties are | | | | from stabilizing - tighter mortgage criteria |
| lingering on the market for months and | | | | by spooked lenders is preventing many ready |
| months. Yes, things are not good for home | | | | and willing buyers from qualifying for home |
| sellers here, but we are not facing | | | | financing. |
| armageddon, either. Houses are still selling | | | | |
| and home buyers are still buying homes. It is | | | | As often happens when a crisis appears, those |
| just taking longer to sell homes and the | | | | in control tend to overreact and enact |
| profits made on home sales have come down, | | | | regulations that send the pendulum swinging |
| but that is because the prices of houses | | | | to the end of it's opposite arc before |
| where highly inflated just two years ago. | | | | settling somewhere in the middle as natural |
| | | | forces slow it down. Because several large |
| We're starting on the path of a corrected | | | | sub-prime mortgage lenders filed for |
| market. This is the case in many metropolitan | | | | bankruptcy and the number of foreclosures is |
| areas such as Richmond. But, before we will | | | | climbing, most, if not all, mortgage lenders |
| get back to a normal real estate market, the | | | | have tightened up on their lending practices |
| momentum of the housing pendulum will cause | | | | to the point where many buyers can no longer |
| the market to swing towards the other extreme | | | | qualify for a mortgage who normally would |
| from what we saw two years ago and put a | | | | have. And I don't mean the high-risk |
| deeper gash in the housing market before it | | | | borrowers that are now defaulting on their |
| swings back to equilibrium. The question | | | | mortgages. |
| remains - how deep will the pendulum's arc | | | | |
| slice into the heart of real estate and how | | | | Before the real estate market gets any |
| fast will it swing? | | | | better, the mortgage pendulum needs to swing |
| | | | back down without creating a deeper gash in |
| Things could get worse for both home sellers | | | | the availability of financing for more home |
| and home buyers before they get better from | | | | buyers. Until banks and other lenders relax |
| what I am seeing out here in the | | | | their criteria, the actions of the Fed and |
| neighborhoods and tracking the market. | | | | the White House will not have a significant |
| Sellers are facing even longer selling times | | | | enough of an impact to turn the housing |
| because of additional foreclosures hitting | | | | market around. If the rate of the number of |
| the market and job relocations. Home buyers | | | | houses offered for sale continues to grow and |
| are having a harder time qualifying for | | | | the pool of able home buyers does not keep |
| mortgages because of the sub-prime loan | | | | pace, conditions in the dungeon will only get |
| problems. It's a mess, no doubt, and we | | | | worse as the pendulum comes ever closer with |
| cannot really be sure how painful it all can | | | | each swing. |
| get for those having to sell or buy a home. | | | | |
| | | | Ciao for now,Bernie Rosellen, Your Agent In |
| You can probably make as good a prognosis of | | | | The Field Please keep in mind that my |
| your local conditions as any of the real | | | | statements above are based on my personal |
| estate pundits, maybe even better, from just | | | | experiences and observations around the |
| knowing a few stark realities. In order to | | | | neighborhoods of central Virginia. Some |
| survive the cuts from the pendulum, sellers | | | | statements may not reflect fully the |
| need to be realistic with their profit | | | | situations, regulations and laws of other |
| expectations. Your opinion on what your house | | | | states nor apply in all areas, so please see |
| is worth is inconsequential. You will have to | | | | what applies in your state (my disclaimer to |
| accept what buyers offer or not sell. Home | | | | keep me out of Realtor Jail). |
| buyers are the market, not sellers. And right | | | | |