Real Estate Will Be Better In 2010?

Most of the real estate investor says that 2009 was a brutal year and even though for some others it is an opportunity for buying. The National Association of Realtors (NAR) says that existing home sold for good profit in October 2009, i.e. approximately 7.1 percent from a year earlier.

This might be good news for real estate agents. Real estate interest rates fell under 5 percent and The National Association of Realtors (NAR) reports that in fact home prices rose in almost 30 metro areas during the third quarter of 2009.

Lets we discuss what about Real Estate 2010? Real Estate will be better or not. Here are the views of some of the economists.

Foreclosures & Modifications

Since it initial tracking foreclosure activity, no month was worse other than July 2009 when foreclosures filing topped about 360,000. Gladly, the monthly numbers then retreated for the rest of the months in 2009.

Some of the foreclosure filings confidently seem like excellent news, but lender events against the borrowers have delayed, but not ended. Foreclosure action is being delayed, deferred and put on hold with foreclosure suspensions, lawful challenges and loan modification efforts.

As we know the major loan modification project is the central government’s Making Home Affordable program. If a borrower passes a 3 month test period then the test loan terms are changed into permanent financing.

Option ARMs

With an option ARM, borrowers choose how much they need to pay every month during the loan’s initial period. Usually borrowers can pay at the 30 year fully amortizing rate, a 15-year self amortizing rate, at a base rate which might not even cover monthly interest costs. The interest which is not paid is added to the exceptional principal amount, this is called negative amortization

Due to declining house values, most option ARMs cannot be refinanced except borrowers put more cash into a home. As well, many option ARM borrowers will not be eligible for federal help because the price of their loan exceeds the rate of their property by more than 20 to 25 percent. Massive numbers of option ARMs planned to re-cast in this year will add to foreclosure totals.

Interest Rates

According to Canada ‘s Globe and Mail the going rate for T-bills growing in first quarter period has really been -0.3 percent. If somebody invested $100 they would get back only $99.70. This is an assured loss even before we get to increase and reduced buying power.

The flight of depositor capital raises three points: First, it’s hard to see how much lower interest rates can go so this seems like very excellent time to refinance or finance real estate.

Moreover the mortgages as well as other forms of financing covers more difficult to get as credit have contracted.

Finally, when a negative rate of interest ends the inevitable result, it will be more mortgage costs and more foreclosures as monthly expenses increase for almost all adaptable loan borrowers, not only for those with option ARM products.

(ArticlesBase SC #1809403)

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