Experts Say High Foreclosure Rates Have Created Buyer’s Market

Posted in Foreclosure, August 31st, 2006 |

With over 27,000 new foreclosure properties hitting the market in may of 2006 alone, many experts believe the housing boom of the past five years has finally come full circle and led to what many are saying is truly a buyer’s market.

During the recent boom, we saw housing costs rise to new heights, causing many people to overpay for homes. Lured by the prospect of profiting on investment, many homebuyers and real estate business people moved to buy up homes, hoping to capitalize on the inflated costs and low interest rates presented by lending agencies to potential buyers.

However, in the past two years, the market has seen a dramatic slowdown. With so many investors trying to flip homes for inflated prices, the market became flooded with overpriced homes that no one is moving to buy. In addition, many of these investors who hoped to sell quickly are now stuck with the rising interest rates associated with the adjustable rate loans they have taken out, and are now stuck with those costs.

These are the factors that have caused the dramatic increase in the nationwide foreclosure rate. This increase has especially occurred in the most desirable places to live, including metropolitan areas and areas on either coast.

Many feel this has led to a buyer’s market. Since so many people are facing foreclosure, they are now looking to move their property for practically any price. In addition, many homes are being sold at auction for well below their market costs. With so many availabilities on the market, property values have stabilized and even dropped in many areas.

If you have been sitting on the fence waiting for the right time to get involved in foreclosure investing, no9 might be the right time. While it may be a while before we see the kind of upsurge in demand for housing and property values we saw over the past few years again, property can be purchased for very low relative prices at the moment.

The one drawback is that interest rates are rising, and for some, this may be hard to cope with. However, for those looking to buy a new home for themselves, this may be the perfect time. Getting into a fixed rate loan for a low initial home cost and then refinancing later when interest rates drop again could be a very wise decision.