Despite Near record Foreclosure Listings Filings in 2007, Foreclosure Crisis Expected to Deepen in 2008
While the year 2007 saw more foreclosure listings come on the books in most states than in any previous years of the recent foreclosure boom, experts are now saying 2008 is primed to be even worse, and that the foreclosure listings epidemic is far from over.
With over 1.8 million homes having already become the subject of foreclosure listings since the beginning of the real estate crisis, it seems that the continued downslide in home values and buyers nationwide is changing the face of the types of foreclosure listings we are seeing appear. In previous years, most of the foreclosure listings activity has been linked to sub-prime mortgages. These mortgages surged in popularity during the later years of the housing boom which preceded the real estate crisis, as they offered low initial cost mortgages to borrowers with bad credit history and low income. The dream of home ownership at a low cost appealed to many, but unfortunately many of these loans carried adjustable rates, which resulted in huge increases in monthly payments due after the first year of instatement. This left many low income homeowners reeling, and sent many properties in states across the nation to foreclosure listings.
But as 2008 begins, experts are expecting the increasing appearance of foreclosure listings for homes in affluent suburbs and posh communities around the country where real estate investment saw record highs at the early part of the decade. Many of these investors also purchased low initial cost adjustable rate mortgages, with the intention of selling these properties off before or soon after the rates adjusted. But when the market fell, these homes had no buyers. Many investors were able to hang onto these homes longer than the average homeowner, but now, with no end to the problem in sight, many former investment properties in coastal towns, rich neighborhoods and popular cities are appearing in foreclosure listings. It’s simply easier for lenders to let these properties go to foreclosure listings than to continue paying the extraordinary monthly mortgage payments.
This is evident in areas like Miami, which leads the nation in the rate of foreclosures. Southern Florida saw huge over development and investment in recent years at sky high prices, and now that market has completely imploded. In California, which fought off the trend in rising foreclosure listings for some time, home prices are beginning to fall drastically faster than any other region of the country, making it increasingly hard for homeowners to sell of properties anywhere close to what they were purchased for. Massachusetts, Michigan, Nevada and Indiana are also experiencing severe increases in foreclosure listings.
In 2008, experts expect more investment properties to come onto the market and ever falling home values. But while 2008 may be a bad year for foreclosure listings, it’s primed to be a great year for those interested in investing in homes found through foreclosure listings. With a flooded market and lenders desperate to off the properties they repossess, foreclosure listings are being sold at extraordinarily low rates all over, and offer a huge opportunity to buy great properties for a fraction of what they will actually be worth when the market does finally steady itself. If you can, getting a good mortgage plan on homes through foreclosure listings could be a great idea in 2008, provided you’re prepared to hang on to them until the market steadies. But with opportunities for 50% or more off local properties, there’s no better time or way to invest in real estate than over the course of the following year. Keep an eye on this trend, and be sure you know what you’re getting into before you buy. Getting your hands on foreclosure listings in economically sound areas with good school systems, jobs and potential for growth, could be a very wise investment in 2008.