The Future of the Real Estate Market for 2008

Copyright (c) 2008 Troy Foote

Will the current real estate condition get any worse before it gets better?

That is the question that many homeowners are asking. Because the market has not seen conditions like this within the last several years it is no wonder that many homeowners are worried.

There has been a number of factors that have contributed to this worry: prices of homes have fallen sharply in a short period of time, home ownership for first-time buyers have dropped due to being frozen out of the market and to make matters worse, foreclosures and mortgage brokerage bankruptcies are at a all time high.

Experts are telling us that the current market condition is going to get worse before it gets better. A couple of factors that determine this is that interest rates are not improving nor is obtaining credit.

However it is not just the residential market that is being affected, commercial real estate is suffering too.

Many experts believe that commercial real estate will continue to soften throughout 2008 including shopping centers, offices and apartment buildings. Because of the slow economic growth, interest rates will remain high thus triggering the continued softening of the commercial real estate market.

Many feel that the relief from the real estate market will not be achieved soon, at least not in the coming months. The inventory of homes currently on the market has continued to grow in the past months. Just in the first quarter alone over 730,000 homes have received foreclosure notices, which is one out of 171 homes across the US!

According to the U.S. Census Bureau the rate of homes in the United States there were vacant and for sale during the last months of 2007 was higher than it had been since 1965.

Demand for housing will remain low, impacting the prices of homes. . High risk buyers who would have been able to qualify for sub prime loans in the past have now discovered they are locked out of the market, thus unable to provide any immediate relief.

Furthermore, even buyers who are able to qualify but who do not have a large amount for down payments may also discover it remains difficult to become approved for mortgage loans.

While residential markets throughout the United States have been hit hard, Florida seems to be suffering more than many others. Part of the reason for this is the fact that literally thousands of condominiums that were under construction are anticipated to be completed this year.

In many cases, deposits have already been placed on these units; however, there is some concern that because property values have dropped and the tightening credit situation will give buyers reason to be concerned and perhaps even back out. In the event a large number of buyers back out of those units, this could cause a serious problem with construction loan defaults in this market.

California has also suffered as buyers who struggled to take out risky loans in order to purchase homes with soaring property values in the past few years discover they are no longer able to meet their housing payments. In many cases, selling those homes now is difficult as property values drop and mortgage payments rise.

While the news certainly may appear to be grim, there is some silver lining to those dark clouds. It appears that the housing market could well bottom out in 2008. This is actually good news because the market must bottom out before it can begin the climb back to the top.