If the battered real estate market has not already taken enough blows, get ready for another round of downward price pressure and increased inventory levels as a result of national mortgage lenders taking drastic steps to forego the rising tide of foreclosures.
Foreclosures are hitting record levels and more are forecasted over the next year. Lenders see the writing on the wall as they face astronomical losses on loans gone bad. As a result, lenders have begun to “short sale” loans – a process whereby they cut their loss and accept a payoff that is less than what is owed them by the borrower. A short sale takes place before the home is foreclosed on and involves a buyer’s purchase agreement for the seller’s home.
A lender’s willingness to take a loss, consummate a short sale and forego an expensive foreclosure is about to soar. The reason is simple – the huge volume of loans falling into default. And a lender’s worst nightmare is owning all these foreclosed homes.
Over the next year lenders will be more aggressive and willing to move property fast! The prices they’ll “accept” will be considerably lower than what we now see in our already soft real estate market. Their objective will be to blow out a sale in under 60 days; something that will happen with a low enough price!
This process will likely cause a sharp, but temporary dip in home prices. Once the tsunami of pre-foreclosed homes passes through the U.S. economy, including the Twin Cities, real estate prices will firm and begin to rise once again. The flood waters will subside and “owning real estate” will once again have a good name.
As a result of this wave of homes that will hit the market and the lenders’ willingness to sell at fire sale prices, there will be a major transfer of wealth that takes place. Buyers and investors that purchase real estate over the coming months will be the ones who gain and gain big. Unfortunately, many home owners will lose their homes during this process.
Adding to this buying opportunity is the fact that the demand for rental property has been rising over the past year, with rents up about 5%. This is just the beginning of the surging demand for rentals. The increase in foreclosures and the tighter lending guidelines are paving the way for the strongest rental market in years.
Those who purchase real estate over the next year when it is radically on sale, place a renter in that property and hold it for 5 years or more could make a fortune.
Due to the record 32% increase in national values from 2003-2005, the market is now giving back some of those gains. Once this cycle ends, prices will firm and rise once again. Today however, and for a limited time, a most unusual scenario exists: motivated sellers, motivated lenders and a surging demand for rentals. This clearly presents an incredible buying opportunity – both for home buyers and property investors.
In an attempt to keep much of the tsunami pre-foreclosed homes from hitting the MLS market and further depressing prices, we are working directly with a number of lenders in an effort to match their inventory of homes with buyers and investors. If hundreds of additional homes, priced under market, were to hit MLS it could be devastating to other sellers and force some to short sale their own home, adding to the overall problem.
The tsunami has appeared on the horizon and may be arriving soon. These homes will be sold and will be sold at prices buyers will be excited about. They will be real deals. When they are gone the market will be poised to slowly return to normalcy.
As we prepare for the tsunami of housing inventory and the incredible prices that will accompany it, we are positioning buyers and investors to take advantage of buying these properties quickly as they become available.
More than 70 percent of all millionaires made their money in real estate. The smartest ones bought right. “Buy low – sell high” is the golden rule that has produced these millionaires. Real estate is now poised for a time such as this. Don’t miss out.
XtremeInvestors are real estate investors who are ready, willing and able to take advantage of Xtreme buying opportunities that our program uncovers.
Membership to become an XtremeInvestor is free – but does require the investor to complete four steps before buying opportunities are made available to them.
XtremeInvestor seminars and briefings are held regularly and are one of the required four steps to membership. Seminar schedule.
Our nation is at an interesting juncture. Our economy and banking system is under incredible pressure; one of a serious nature.
The mortgages which were written between 2004 and 2006 paved the way for the collapse in real estate prices, which in turn has been pulling down all other areas of the U.S. economy. Currently there are over 1 million foreclosures across America. The frightening fact is that there are more than 6 million mortgages that are 30 days or more in arrears! This is potentially more serious than anything we’ve seen yet.
Posted: Sep 25, 2008
We are in the midst of tough real estate recession; the worst this country has seen in decades. Real estate prices in some areas have fallen to the point where many people are paying more on a mortgage than their property is actually worth!
Posted: May 14, 2008
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