Don’t be Fooled by the Headlines – It’s Still BAD Out There
I really don’t like being negative a person. My normal character is to look at things from a glass is half full perspective. Unfortunately the recent report I just read leaves me no choice but to be negative.
The bad news was from Fitch Ratings as reported in the Daily Real Estate News. Overall Fitch Ratings said it “remains cautious” in its outlook on home values. The report explained that the recent uptick in pricing was due to technical factors rather than “fundamentals”.
Fitch went on to say “If liquidations continue at their current pace it would take 34 months to clear out the inventory of serious delinquencies.” That is a long time and doesn’t factor in the people who haven’t given up yet. Are there a large number still out there who will join the ranks of the serious delinquent? My guess in some areas is a resounding YES.
Some of the factors making a false rise in prices were: unsustainable low interest rates; tight supply of homes for sale; weak levels of new home construction; continuing high unemployment and unimpressive wage growth.
I personally would add that investors are buying as many “rentals” as possible which when coupled with tight lending standards make it hard for a first time home buyer to compete with the cash these investors are throwing at homes.
Real estate is regional in nature and if you are reading this in Montana then you most likely have no idea what I’m talking about. I’m based in California and even in our state there are different outlooks depending on the local conditions. I do know this though – California’s central valley is the worst place in the country for upside down mortgages.
The Sacramento Bee recently published a story about the amount of mortgages underwater within the greater Sacramento area. Most readers were startled to know that 45 percent of all mortgages were under water. That is a large number and most don’t see any positive news in sight. It begs the question of whether we truly will see a sustainable real estate market until these mortgages are dealt with one way or another.
I do know this – if you have an under water mortgage and you aren’t quite sure what to do then you need to call me immediately. Doing nothing now is the worst thing you can do.
If you have any questions or concerns about your own personal situation I would be happy to give you a FREE one on one legal consultation. You can call me at 916.442.6400 or send me an email at firstname.lastname@example.org or just visit my website www.upsidedownca.com.
California Attorney and
licensed Real Estate Broker