Today’s housing market is in a downward spiral. The present state of our economy has made it nearly impossible to sell your home for what it is worth. It’s also becoming impossible to get mortgages to buy those inexpensive homes that are flooding the market.

Even with government bailouts and price reductions happening everyday, the housing market is no doubt in a standstill. Selling a home today is quite a challenge due to the steep competition out there.

Foreclosures are popping up everywhere, setting the bar a lot lower and allowing people to pick up higher end homes for low end prices. This then effects home owners that are trying to sell their home at full value.

Hundred thousand dollar homes selling at 80 thousand dollars really impact the neighboring homes that are also trying to sell. They then need to lower their asking price in order to stay competitive. This makes it a buyers market. If those sellers don’t lower their price, the chances of a quick property sale is slim.

Buyers should be reaping the benefits in a market like this, but alas, they too are suffering under the weight of the economy. Banks have no money to lend because they have lost so much with all of the foreclosures. The more money they lose, the tighter they hold on to the money they have left.

Even though some blame the current housing (and economic) crisis on bank greed, the ones really hurting are the people who are just looking to achieve the American dream. Buyers want to scoop up valuable properties for great prices, but cannot get a simple mortgage approved because of the ‘crunch.’ Banks have burned the candle from both ends and now have nothing left.

Their greed led them to give mortgages to people who could not afford them. When those people couldn’t pay, the banks were forced to foreclose in record numbers. This equals a huge loss for the banks and with not enough money coming in, they aren’t willing to lend any more money out to potential buyers. This generates no revenue and leads to banks needing to ask the government to help them out of a bind.

Banks too were living above their means apparently. People living above their means can be blamed for the current housing market. Buying homes they cannot afford leads to foreclosure and multiplying that by millions leads to an economic nightmare. Banks cannot absorb the costs anymore, people cannot afford to make their payments, and new buyers cannot afford to buy a home with no loans.

    Posted in Mortgage from Investor on 25. Nov. 2008