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So, as the predictions come true, when is the end of the housing crash really going to happen? That is hard to say. Let’s factor the numbers: from 2002 – 2006 80% of all loans were “creative loans,” the construction industries and real estate jobs have just about collapsed, banks are being bought out for pennies on the dollar (countrywide, Bear Stearns), cost of living rising (probably due to interest rate being lowered by Feds), housing values are rapidly decreasing, etc. Let’s not forget about gas prices…wow, have they gone up. To add to the mix, WAMU is being sued for appraisal fraud and blacklisting (http://money.cnn.com
/2008/01/17/real_estate/wamu
_lawsuit.moneymag/
index.htm). Now that it is evident that the houses were overvalued and that a large reason for the increase in price was due to the “creative loans” (let’s face it, without those people could not afford a “real” mortgage on a $700,000.00 house, therefore, the demand for houses would have been greatly decreased…it’s simple economics…supply v. demand), what is the real value of homes in California?
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Especially now with a huge surplus. No one really knows. With the price declines and foreclosures, my prediction of the snowball effect seems to be coming true. Just take a look at these sites that show you how to “walk away” from your mortgage: http://www.youwalkaway.com/, www.walkawayplan.com, http://walk-away-today.net/BehindOnPayments.cfm, etc. Several people know that their homes will be foreclosed on, but are saving their money instead of paying a mortgage that they cannot afford. Most likely, they will not be foreclosed on for several months. The banks cannot foreclose on all the homes that are delinquent on their mortgages. They probably do not have the staff that is necessary. If they did foreclose on all the homes that are past due, the Feds may take a closer look at the bank…and no bank wants that. So, what happens now? These banks are becoming desperate. Just look at all the infomercials regarding “Auctioned homes.” I personally think that it will get worse…much worse. There are just too many factors involved.
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Call me pessimistic, but I would not be surprised if Wall Street crashes because of the housing market and all the banks that are and will be having problems. If I was a real estate agent, I would become exceptional at selling foreclosed homes. That should keep you in business for a couple of years. Here is an interesting website to take a look at: http://www.realtytrac.com/. Just click on your state, enter your zip code where it says “Search (your state) Foreclosures”, press “begin search.” When the search is done, click on “view map.” It will show you several different types and status’ of foreclosures. Good luck and save your money…it will be a buyers market very soon.
Foreclosure signs are becoming as common as For Sale signs were during the housing boom.
Article by
Brett Duncan-Creger
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