Should you wait and watch or dive in?
Monday, May 17th, 2010The Real estate market is bad and it’s not going to be kind in the future. Many analysts believe that the situation is bound to get worse as the year progresses. The overall picture in the country shows that the foreclosure rates are increasing.
The other side of the coin, however, projects that the foreclosed sale is picking up; Arizona showed the biggest increase in the foreclosed sale price, which is up by 15.5 % in the start of November as compared to the previous month. Other states also witnessed modest growth, like California, which saw a 1.83 % increase; Nevada, Florida and Texas showed an upward movement of 1.45, 1.27 and 1.05% respectively.
Only three states saw the foreclosure sale prices go down, and not by much. These states were Maine, West Virginia and Washington, where the drop was 1.88, 0.72 and 0.6 percent respectively in the month of November when compared to October. What this essentially means is that it is a good climate for individuals who really want to buy their own homes and have been looking for a good opportunity to do so. The prices of the foreclosed properties are still well below the fair market prices, but are slowly rising.
The choice of diving into the real estate market is difficult to comment upon. At one end, the foreclosed properties are good investment propositions. The mortgage loan rates rose by two base points for the 30-year, fixed-rate option as well as the 15-year, fixed-rate from last week. So the 30-year and 15-year fixed-rate loan rates stood at 5.34 percent and 4.72 percent respectively. Whereas the 5-year fixed-rate mortgage loan actually saw a reduction in rates by 7 base points to be at 4.69 percent.
To indicate the future trend, the 30-year fixed-rate mortgage loan rates were 6.32 percent in the October 2008. This means that the interest rates are favorable for buying a new home for many thinking of having a place of their own. However, the average American is still not able to take advantage of this opportunity due to reduced employment opportunities and difficult cash flow situations.
Some believe that it is a nascent stage and one wouldn’t get this price advantage any time later. With the government tax credit program of $8,000 now ending in April, 2010, the low mortgage rates, and foreclosed properties up for grabs at a lower than fair price, we should see better buying trends for foreclosed properties if not the new ones.
