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As I go through the endless supply of articles regarding the housing market, several factors come into sight. Foreclosures are on the rise. Inland Valley Daily Bulletin stated, “Foreclosures in Southern California are up almost 30 percent since January.” Construction is slowing. Banks, mortgage companies, construction companies, and auto manufactures are all laying people off by the thousands. Dailynew.com stated, “Washington Mutual Inc.'s big Chatsworth campus took another hit Thursday, losing 140 more jobs as the bank continued its aggressive cost-cutting plan.” “In January, Washington Mutual cut 1,000 call center jobs at Chatsworth and moved most of them to San Antonio.” Oddly enough, houses still continue to appreciate. Of course, the rate at which they do has slowed drastically, but it still keeps the houses out of reach for many. Are they really worth the asking price? I have read that several homes have been “overvalued”. And what about gas prices? Those who commute from the
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Inland Empire not only have to deal with congested driving conditions, but higher fuel costs each month. I just wonder if there will be a snowball effect. Nowadays, people can watch their homes depreciate right in front of their eyes realestateabc.com.Will this have an influence in the panic? CCR Newline stated, “As interest rates have risen, concerns have grown about how sub-prime borrowers will be able to keep up with higher payments.” As interest rates increase and the market settles down, that “investment” that many think they made may end up being their downfall. Take for example if the market continues to be stale, interest rates continue to rise, as well as foreclosures, and people watch that $500,000.00 home drop to a value of $400,000.00 and they are in an “interest only” loan. Would they just walk away from the home? Your equity in this situation would be -$100,000.00. Not to mention, your monthly payments went from around $2,500.00 a month to $3,500.00 due to the increase in the interest rates on your adjustable rate loan. In
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5 years when that “interest only” loan matures, you still owe $500,000.00. I am not a mortgage expert, so don’t quote my figures. I also know that people who own homes don’t like to hear this, or choose not to believe it. Nobody wants to hear that their stocks are dropping. When it does, mortgage accounts will be the first one paid. All other debts will be paid if and when funds are available. That is when experienced collection people will become a great asset for you and your business.
Gone are the days when the homes sold before they were finished being built.
Article by
Brett Duncan-Creger
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