Whatcom Home Stats: August 2008

The Current Real Estate Cycle

So this article is going to be a bit edgy and may provoke mind tingling thoughts of Inquisition.  Perhaps you may even get dizzy.  I did!

Where is the market going from here?  In my opinion...nowhere but down...like a home sick mole!

 

credit crunch

 

These days whether I'm talking to a mortgage broker, another agent, investors, etc. I ask "So where do you think the real estate market is heading.  Most think the worst is over, but very small few agree with my reasoning.  So, I decided to bring it to the Rain and hopefully make it out alive...hit me with your best shot.

With the over-all condition of the financial market, stock market, and real estate market I can't believe they're are so many optimist out there.     

 Here's my roller coaster of a explanation...

Cause:  Lenders tightening their lending standards to only type A borrowors.

Effect:  Large pool of buyers are wiped out!

Cause:  Less buyers shopping for real estate.

Effect:  More inventory on the market.

Cause:  The longer it takes to sell the market inventory.

Effect:  More seller competition = More buyer incentives = Price decreases

Cause:  More Price declines

Effect:  More defaults

Cause: People maxed out the Home Equity Line and are now living on credit until the next ball drops. 

Effect:  More defaults, More credit crunch, More inventory

Cause:  Reserves are low for lenders lending money.

Effect:  Money costs more to lend...Interest rates go up.

Cause: Interest rates go up

Effect:  People can't afford to buy a home

Cause:  Inflation

Effect:  Homeowners can't pay their bills, ie., mortgage and credit cards

Cause:  Homeowners can't pay their bills, ie., mortgage and credit cards

Effect:  More Defaults

Cause:  2 More cycles of Adjustable rate mortgages to reset over the next year.

Effect:  More Defaults....more inventory, more price declines.

We'll you get the idea...it's a vicious cycle.  I could go on and on...I didn't even touch the volatile stock market and it's effects.  Please give me your thoughts as I am open to your opinion and I do realize mine is a bit different from the average Joe.

If your a buyer make sure you buy with your market decrease buffer built in.  If you're a property seller make sure your property is priced right to sell fast or get creative. Creativity can be a win/win situation in this market. Let me show you how!

Specializing in Bellingham, Wa Bank Owned Properties, Short Sales, and Seller Financed Properties.  Please give me a call, I'd love to work with you!

Comment balloon 10 commentsTara Camp • August 26 2008 08:40PM
The Current Real Estate Cycle
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