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Teaser rates were also very popular,
such as interest-only or negative
amortization loans. A negative amortization
loan will allow a prospective home
owner to qualify for an introductory
rate (sometimes as low as 1%) while
differences in payment and accrued
interest are added to the loan balance.
A combination of low interest rates
and these types of loans, led the
market to unprecedented levels (sub-prime
lenders make loans to borrowers with
poor credit ratings). Presure on
The Real Estate Market "Downturn"
As of August of 2007, the real estate
market had experienced its sharpest
drop in 18 years. The delinquency
rate on sub-prime mortgages had surpassed
12% (still climbing - please visit
us again for an update). Going further,
the market turndown had forced lenders
to be more careful when issuing loans,
while making it harder for individuals
to refinance or purchase a home. The
NAR had predicted that the "housing
slump" would continue through
2007 and into 2008. Forecasts have
been lowered from 6.48 million to
6.04 million existing home sales in
2007. New home sales have been revised
to 852,000 from 1.05 million for respective
years. In addition, housing starts
are projected at 1.43 million from
1.8 million in 2006. There have been
many predictions as to when the real
estate market downturn will end (only
time will tell). A bigger issue; is
whether or not the housing market
will affect additional parts of the
economy.
Infecting other Parts of the Economy
Home values could have an additional
effect on the U.S. economy. Anticipated
defaults on mortgages and new lending
standards could contribute to a gradual
decline in spending by consumers.
Less consumer spending may lead to
a weaker economy, forcing companies
to downsize while laying off workers.
If unemployment rises, the real estate
market could feel additional pressure
as this may lead to a rise in home
inventories. By mid-2007, inventories
of homes had reached a 15 year high.
This represents an 8.9 month supply
at the respective current pace.
Please check back with us for updated
information on the real estate market.
Additional Key Terms Include
Appraiser
Process Explained - Certified
and Licensed Appraiser - Learn
how the appraiser process is performed.
A licensed real estate appraiser uses
his or her knowledge of the real estate
market to derive at property value.
Real
Estate Appraisal - Explanation
on the Inspection and Report -
Read how a real estate appraisal is
used to develop an opinion of value.
Real
Estate Agent - Realtor Guidelines
and Ethical Behavior - Explanation
on real estate agents and how they
must acquire a real estate license
to represent a buyer or a seller in
a real estate transaction.
Real
Estate Investing - Information
on Foreclosures- Explanation on
real estate investing and the purchase
of real estate for profit.
Commercial
Real Estate and The Real
Estate Market - Learn more about
commercial real estate and how it
can be bought or sold in the real
estate market.
Real
Estate Development - Modern
Architecture and Structure - What
is real estate development. Learn
how developers are usually in the
form of a company such as a corporation,
but can also be an individual or partnership.
Real
estate law - Including The
Real Estate Contract - Read up
on how real estate laws vary significantly
between jurisdictions.
Real
Estate License - Appraiser,
Realtor, and Mortgage Broker -
Explanation on mortgage broker, real
estate agent, and appraiser licenses
and how they must be updated with
continuing education.
Real
Estate Market - Updates on
the Condition of the Market -
How do the real estate agent, property
appraiser, and mortgage broker affect
the market.
Real
Estate Appraiser Jobs - Trainee
and Experienced Appraisers - How
do you become a property appraiser?
Click here for further information.
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