These days, we are seeing quite a lot of positive news on the economic front – certainly much more than at any time in the last few years. In particular, a lot of experts are touting indicators such as the creation of jobs and rising consumer confidence as evidence that we are, in fact, slowly moving into a recovery phase. This is good to hear, especially after all the hardships that most of us have been through in the last few years, but does this positive news hold true for the real estate market?
Well, to be quite frank, we don’t think it does. The reason that the real estate market suffered so much in the last few years was because prices dropped quite a bit. Why did prices drop? Well, the falling prices were brought on by the bank foreclosure crisis. At some point in late 2007, the banks realized that a lot of people had run into cash flow issues, and could no longer continue paying off their mortgages. As a result, the banks were left with no option but to begin seizing the real estate assets belonging to these delinquent borrowers. This, of course, meant that the market was suddenly flooded with a huge amount of repossession property – so much, in fact, that there were not enough buyers around to absorb this impact. The fact that there were so many more sellers than buyers meant that there were a large number of very cheap houses for sale in the bank foreclosure auctions, and prices began to drop as a result.
The situation now is somewhat different. Because there are less houses being foreclosed upon, there are a lot less of the bargains that were floating around during the peak years of the financial crisis. However, some of these deals are still out there – you just have to look for them. If you are dead set on purchasing a home soon, we suggest looking at the foreclosure resale market.
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