September 1st, 2009
Market Update
A great percentage of buyers around the country are faced with values that are being reset daily due to the great number of foreclosed properties as well as walk-away buyers. Lenders are forced to sell there mortgaged assets to vulture consolidators/funds, buyers or to discount the property so deeply that it is affecting the balance of the market. Should this trend continue into 2010, the country could face a change in perception relative to home ownership, where the home is no longer looked upon as ones equity in the future. For now, there seems to be an overall balance between gaining prices in new construction and newer homes. (post 1995) Older homes with outdated styles, IE 70/80's architecture with outdated kitchens, appliances, bathrooms are garnering little interest.
As smaller local banks continue to fail, the pressure on homes prices may continue their decline until a logistical balance can be reached. The consolidation in the banking industry may be hurt many borrowers in the short term, due to the inefficiencies in the processing of mortgages as the bottleneck of mortgage applications gets smaller and the recovery advances. Big banks have opened there doors to highest quality borrowers, while less than perfect credit applicants are shuttled through the system at a snails pace. These customers, that the banks do not want to loose are creating the bottle-neck for the lenders due to the new Federal regulations. Once the flow of money and the banking crisis abates, we should see a surge in new construction and resale properties. I believe it will be the biggest surge, over the shortest period in US history. When that will happen depends on the FED |
