but what happens when there is either a local economic downturn or an increase in mortgage rates 逼老板喝火锅锅底 运钞车被劫匪炸开

Finance We have all heard it. The real estate bubble has burst or is at the very least deflating. Homeowners in approximately two-thirds of the country are watching their home equity melt away. While bemoaning the fact your equity loss is painful, there is still time to look sensibly for housing deals and act accordingly if we begin reassessing how we view real estate. This article will attempt to explain the phenomenon of the housing bubble, why it had to occur and finally how housing should be approached as the market corrects itself. Keep in mind that despite all the negative press over the past months looking at the value of real estate over the long term is fundamentally sound. In the meantime; however, it is time to take stock and determine what your best strategy will be to capitalize on the value of your home. Unless you are a professional investor, most people view their home as a place to live and raise their family while paying bills using wages earned in a growing local economy. Perhaps it is time to look at your home for what it really is a commodity. And just as any commodity, whether it is common stock, pork bellies or real estate, it is subject to the same economic principles that will make its price increase one day and fall the next. The only real difference is the amount of time it will take for the housing market to respond to those factors influencing its price. What is it that causes your home to have value? The obvious answer is and always will be how much demand is there by potential buyers of your home. Think of it a like selling art. Its selling price is determined solely by what others will pay for it. If the art looks as if it were scrawled on the back of an envelope, you will have few buyers. Conversely, if the art has mass appeal, much like the famous Currier and Ives prints seen so frequently on classic Christmas cards, then there will be more potential buyers. The greater the number of potential buyers the greater the demand there will be for your home. If you are located in a town with a strong local economy, where businesses are expanding and everyone is experiencing an increasing standard of living, there will be greater demand for housing as more job seekers move to the area in an effort to participate in the local prosperity. If you are one of the lucky homeowners in the community, the increasing value of your property is a direct result of its demand. From this example you can easily see that the value of you home has nothing to do with what it cost to build, but rather the number of potential buyers. The greater the scarcity of appropriate housing, the higher the sales price. This is the very reason a home in Lincoln, Nebraska is priced less than a home of comparable size and construction cost in Boston, Massachusetts. Just how high a price can you place on a home before no one will buy? Let us look at the situation that has existed in most of California and south Florida. For this example, we will say a typical family wishes to buy a home in California. In the current market it is quite common to pay $450,000 or more for a 1,300 square foot bungalow. If the buyer were to purchase this small house and finance 95% of the purchase price ($427,500) using a 30-year, 6.125% mortgage their monthly payment for principle and interest alone would be $2,453. Since most mortgage underwriting limits the maximum monthly payment a homeowner may make to 28% of gross income, the buyers must have a combined annual household income of ($2,453 x 12) / 0.28 or $105,151 without taking into account taxes and insurance. And just what percentage of California households have this kind of income? Fewer than 10%. This is not to say there are no individuals who desire to live in the area. Rather, it is simply the number of individuals who are able qualify for financing to purchase property that is limited. The higher the price of housing the fewer the number of individuals who can qualify for financing. Efforts to prop up demand for homes in these higher priced markets has spawned a whole group of mortgage programs designed to permit more individuals to qualify for larger mortgages. These programs range from various adjustable rate mortgages to some that during times of higher interest rates result in payments that are less than the amount required to pay only the interest with the creation of even greater mortgage debt. Many of these programs result in the homeowner gambling on home equity growth through appreciation only without regard to debt retirement. This approach works well when the demand by qualified buyers is greater than the supply of available houses in the market, but what happens when there is either a local economic downturn or an increase in mortgage rates? As interest rates for mortgages increase, fewer prospective buyers are able qualify for the a mortgage. As the number of qualified buyers becomes smaller, home owners must reduce the cost of their house in an effort to sell. Those who remember the when Jimmy Carter was President may also recall that the Federal Reserve Board during the 1970s caused mortgage money to be loaned at interest rates in excess of 14%. During this period many homeowners discovered that if you could sell your house it was usually at a loss. The price of housing was almost in a freefall because the number of individuals who could qualify for a mortgage was so small in relation to the large quantity of houses for sale. Supply had exceeded demand creating a buyers market. While this does not compare to the minor increases experienced recently by the mortgage industry, it does point to the reason home prices have been reduced in most overheated housing markets. Okay, so what do you do if you are living in one of these formerly hot markets such as California or south Florida. The answer is really quite simple. TAKE THE MONEY AND RUN! In investment circles the polite wording is profit-taking. However, if you stay in the same market it will require that you re-invest your profits and essentially return to the same financial position as you were when you sold. Therefore, my recommendation is to seriously consider relocating somewhere that housing is more affordable but provides the same or better quality of life. I am not recommending that you move to the middle of the Ozarks, but rather somewhere that you may again find housing that is appreciating. Just as any investor, your intention is to sell high, take your profits and buy low with the reasonable expectation that you will be able to repeat the process. I would like to introduce you to a little gem you should consider for your next home address. Located within a two hour drive of sandy ocean side beaches and a three hour drive of world class mountain ski resorts this metro area provides all any family could desire — plus the potential of a solid 7 percent growth on your home value rate as predicted by Veros Real Estate Solutions. This area has moderate climate with little snow each winter. So where is this little gem? Raleigh, North Carolina. Formerly thought of as just another sleepy southern city, Raleigh North Carolina began capturing headlines because of its growth in the late 1970s. Fueled, in part, by the Research Triangle Park in conjunction with three major research universities: Duke University, NC State University and the University of North Carolina, Raleigh has grown consistently and now rates as a technical and cultural center in the region. The US Census Bureau currently ranks Raleigh North Carolina, together with adjacent city Cary North Carolina, the 10th fasting growing metropolitan area in the US. Forbes magazine named Raleigh North Carolina the 2nd best place for business and careers. Kiplingers Personal Finance named the Raleigh-Durham area one of the Seven Cool Cities for Young Professionals. Rated the 3rd most educated city in the United States by the US Census Bureau, Raleigh provides a wealth of talent to create what Entrepreneur magazine calls the 3rd Hottest City for Entrepreneurs. Check Raleigh, North Carolina out. See for yourself how much your housing dollar will buy in a great location where housing is still affordable. The local multiple listing service can be accessed through a number of real estate agencies serving the Raleigh and Research Triangle Park area — where you can discover how taking the money and running to Raleigh, North Carolina could be the smartest move you will ever make. About the Author: 相关的主题文章:

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