Another Drop In Value Headed For Property?

After the free fall in real estate prices in 2008, many people thought the worst was behind us, but the projections indicate that we are headed for another steep decline in prices over the next 12 months, after the brief gains fueled by the tax credits.

With a drop of 10-15% anticipated, the coming price drop has been pushed by a combination of federal factors that are combining for the perfect storm in real estate.

After a 36 month departure from the peak of the real estate market, the topic of the day is still real estate and the current trend in prices. Despite the bad news, real estate appreciation was actually reported across the nation in 2009, but it is doubtful for 2010.

Increasing its loan standards may seem counter intuitive to anyone who is familiar with the function of the FHA, and the changes it is proposing will make getting a home loan a little harder.

Due to the inundation of foreclosures, the FHA reduced the number of qualified buys by forcing those with the weakest credit to pay higher payments for mortgage insurance, increasing the required down payment and limiting seller contributed closing costs.

Conventional loan programs are having a hard time placing loans with qualified borrowers, who are turning to FHA financing for easier loans.

With unemployment swamping the real estate market with foreclosures, many buyers have an easier time getting qualified with FHA loans, so they are increasing in popularity. Being forced to utilize FHA type loans, many buyers are finding a great resource in them in a time when conventional loan money is more than difficult to get.

The main catalyst in the national real estate market always has been, and still is, financing. As more lenders open up the credit spigots and make loans to qualified buyers, our market will stabilize and real estate will be a safe investment for homeowners again.

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