• Home
• About us
• Loans
• How it works
• FAQs
• Contact us

Housing market will continue to slow, but for how long? By Justin Hunter

The United States housing market has gone from king to peasant in a matter of months. The get rich quick philosophy of amateur real estate investors has caught up with many who saved up a few thousand dollars after college. These kids are now worrying that there investment was made in haste, at the wrong time.
In a way, yes investments or home purchases from the middle of 2005 on may not have been the best idea if the intention was a quick flip to sell within a few months, to net a few thousand dollars. But real estate has and will always continue to appreciate throughout time. So if you can afford the extra mortgage payment for right now, hang on to your living or investment properties.
Now the million dollar question is: How long will the reeling market last and how low will it go?
The article, “Pain From U.S. Housing Slump Is Likely To Linger, but Some Say Worst May Be Past” published in the October 30, 2006 edition of The Wall Street Journal and written by James R. Hagerty, suggests that the housing market will not go much lower and the plan now is to just patiently wait.
It seems that many industry experts have been enjoying at least writing about the slowing market with large font headlines and catchy quips, but their pessimistic days may be nearing an end.
“Former Federal Reserve Chairman Alan Greenspan, whose interest-rate cuts helped create what he once called ‘froth’ in house prices, said in a speech last week that he detected "early signs of stabilization" in the housing market. Some Wall Street economists also are saying the worst may be behind us.”
But as we have realized in virtually every aspect of business, at least one person will disagree on a major point either for validation or attention.
This is evident from the comment “It's going to get worse before it gets better” made by Ian Shepherdson, chief U.S. economist at High Frequency Economics Ltd., a Valhalla, N.Y., research firm.
“The maximum impact of falling home construction may have hit the U.S. economy in the third quarter, some economists say. But that doesn't mean the housing market is on the verge of a miracle recovery. Construction is expected to fall further as builders struggle to shed a glut of unsold homes. And many economists expect house and condominium prices to continue falling for at least an additional six months to a year in parts of the nation where speculators went wild.”
Most economists can agree, no matter what side of the fence they happen to sit on, that the housing downturn will continue to drag on but will not cause the country to go into recession next year like the attention-grabbing doomsayers are reporting.
Skipping the technical jargon; what does this mean?
Well, it is obvious the market has slowed. But it was expected as a correction was necessary after the 2000 to 2005 boom caused real estate prices to inflate much higher than the economy could support.
So, if you have properties that you cannot afford to feed each month and are not renting them out for enough to make the bills, try to hang in there. A trained professional mortgage coach like the one at LEI Financial can set you up with a money managing plan to survive the next fiscal year. After which the market should rebound and allow you to proceed with your original plan of buying and selling. Although the current market was not ideally what you had in mind, you do not need to panic, you just need some patience.
As for buyers, well you are finally getting what you have been waiting for. Low sales and prices are causing panic amongst the unprepared sellers who expected to sell six months ago for a significant profit. They are now realizing their mistakes and are getting rid of the property at reduced prices just to free up the additional mortgage payment.
Prospective buyers who do not have the necessary finances to purchase a home and will not be able to save enough by the end of 2007 are advised to consider other financing options, such as interest-only or option adjustable-rate mortgages.
Again, it may be best served to contact a mortgage coach rather than just a lender. An LEI Financial coach will have your needs and goals in interest because they will want your business further down the road as well.
So, regardless of what your current situation regarding the real estate market is, relax because there are many options to help you succeed. There is always a way to profit in any market. A professional coach will put you on the right track.

• Back to the news