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Real Estate Crash 2008

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Events Leading to the Real Estate Market Crash of 2008

While many predicted the current collapse of the real estate market, others
were taken by surprise when the market that had left plenty of opportunity in
the last few years for profit began to tumble.

Certainly, one of the leading events that eventually resulted in the crash of
the real estate market was the crumble of the subprime market. As a result an
unfathomable amount of companies suddenly were suddenly facing foreclosure.
Even those companies that were not forced to declare foreclosure found they had
suddenly lost billions of dollars.

The news has been filled with reports regarding the subprime market crash;
however, while it has affected most property owners to some degree there remain
many of remain uncertain exactly how this came to be.

Just a few years ago subprime mortgages were a great advantage to many property
buyers. Buyers who were interested in taking advantage of the hot real estate
market but who lacked good credit histories were able to take advantage of
subprime mortgages in order to obtain loans. The underwriting guidelines for
these loans were generally more lax than traditional mortgages. This allowed
even buyers with poor credit to obtain a loan. In exchange for making a loan to
buyer with less than stellar credit, lenders were able to charge a higher rate
of interest. In addition, so the theory went, lenders relied on the belief that
they would be able to foreclose on property and sell it for a profit in the
event the borrower defaulted on the loan.

The money which funded these loans came from a variety of sources. Low interest
rates made it possible in many instances for lenders to actually borrow money
and then loan out those funds to home buyers. In other cases, the money was
obtained from more complicated sources. As you may or may not be aware, it is
not uncommon for governments to borrow money from central banks. This practice
is particularly common in the United States.

At the time the housing market was stable. In fact, the housing market was
experiencing a high that had not been seen in quite some time. Beyond the fact
that many homebuyers were taking on massive amounts of debt there also existed
another problem. Due to the health of the real estate market at the time, in
many cases there were expectations regarding future growth that in hindsight
now appear to have been unrealistic.

The last two years of the real estate boom occurred in 2005 and 2006. During
that time period lenders did not hesitate in the least to lend money to
borrowers regardless of their credit profile. These loans represented a
tremendous money-making opportunity for lenders. Problems really began to
occur; however, when interest rates began to rise from their previous lows.
Historically, rising interest rates have always had a negative effect on the
real estate market. When rates are low they help to produce demand; however,
when they are high they ultimately cause prices to fall. Until mid-2006 home
builders could not build new homes fast enough to meet the growing demand.
During mid-year; however, the demand began to slow. It was also about this time
that the rate of defaults on loans began to increase.

Before long many mortgage lenders began to find it difficult to obtain money
from their previous sources of funding. As a result, would-be buyers discovered
that loans were no longer as easy to obtain due to the fact that money was no
longer as widely available. Additionally, investors suddenly became wary of
taking on risk and underwriting guidelines grew stricter. Homeowners who had
taken out loans with adjustable rates began to find it difficult to meet their
mortgage payments as interest rates continued to rise. More stringent
underwriting guidelines meant they were unable to refinance to fixed rate
mortgages in some cases. As a result, defaults continued to rise; fueling the
massive rash of foreclosures.

How Investors Can Protect Themselves against the Real Estate Crash of 2008

While the current real estate market is certainly distressing, studying the
history of real estate clearly indicates that it is, by nature, cyclical. There
have been times throughout history when real estate has boomed and other times
when it has remained somewhat stagnant. Real estate still remains one of the
best investments around, provided that you exercise the proper amount of
precaution in order to avoid getting caught up in a real estate market crash.

First, be aware of the need to change your investment strategy according to the
current market. Just as the market changes from time to time, you will need to
be prepared to change as well. Keep in mind that just because the market is
slumping, or has even already crashed, that does not mean that you must forego
investing entirely. It simply means that you will need to invest wisely. One
technique that many investors use is to focus on the best areas for the
investments. This is because those areas are likely to be the first ones to
regain value once the cycle shifts. When prices do begin to pick up once again,
you can use your purchase for leverage and sell the property, then move on to
another investment. The key is to try to time your purchase so that you make
your purchase in these areas right before they peak and then sell them before
the interest in that market begins to wane.

It is also important to make sure you are paying attention to where you are
focusing your spending. Naturally, when the market is down you will need to
wisely slow down on the amount of purchases that you make. Along those same
lines; however, you also need to make sure that you are not spending too much
on property improvements and renovations. When the market is down is simply not
the time to make such an investment.

Paying attention to the cyclical nature of the real estate market itself,
especially over the past several decades, can give you a good indication of
where the current market may be headed next. The main factor that can affect
the real estate market is the theory of supply and demand. Simply put, when
supply exceeds the current demand, the market will experience problems.
Watching for these trends can provide you with critical clues to gauging the
right time to buy as well as to sell.

In addition, be sure to keep an eye on the proportion and layout of your
investments. Ultimately, it is good idea to make sure that all of your
investments are balanced. So called 'paper investments' should be considered
carefully to ensure that you are not investing so heavily in the real estate
market on paper that your total investments will be put at risk when the market
dips.

Finally, make sure that you never become so excited at the thought of an
investment that you put the equity in your own home at risk. While it can be
quite tempting to use the equity in your home in order to make an investment
purchase, this is a risk that can put your own home and future in jeopardy.
Only when your own home is secured should you even consider investing in the
real estate market.

Riding out the Real Estate Market Crash of 2008

Real estate has been regarded as one of the safest investments for quite some
time. Despite the relative safety of real estate investments; however, there
remains the possibility that the real estate market can fall like any other
investment. Over the long term, real estate still remains relatively safe
simply due to the fact that the population of the world continues to increase
while land is a limited resource. When there is an occasional downturn in the
real estate market, it is important to recognize certain strategies which can
be used in order to keep a real estate investment from becoming a complete loss.

The first thought many people have when they realize the market has experienced
a downtown is to attempt to sell the property as quickly as possible before the
market grows worse. In reality, many investors have found that it is often
better if they can manage to hold onto the property and ride out the downtown
in the market. While the market might certainly dip lower before it rebounds,
historically it always does come back.

By selling the property during a down market, you position yourself to take a
certain loss. If you are able to keep the property afloat you stand a much
better position of being able to make a profit on it when the market turns back
around. Of course, holding onto a property during a down market sounds fine in
theory but it can often be much more difficult in practice. One possibility is
to rent out the property in order to attain a positive cash flow while you wait
for the market to turn around.

In addition, it is important to make sure that all of your account is correct.
Many investors find they are not taking full advantage of all the tax benefits
offered to them. Consulting a professional tax advisor in order to locate
legitimate tax advantages you may have missed could certainly be well worth it
financially. You may well find that the write-offs that are available to you
could provide the assistance you need to hold onto the property until the
market swings back around.

If you find that you are facing a foreclosure on the property, then the best
option would obviously be to go ahead and sell it in order to attain as much
profit as possible rather than take a complete loss. In this type of drastic
situation, the key is to look for ways that you can make the property as
valuable as possible. Selling real estate is really not much different than
selling any other type of product. In this case, the product is a home or
building. If you have had the property on the market for awhile, it is
important to look at why it has proven difficult to sell the property. You
might consider making some changes in order to make it more desirable.

Ultimately, holding out during a market crash or downtown involves remaining
calm and avoiding acting on emotional impulses. Making hasty decisions based on
fear will often cause you to take an action you would likely regret once the
market turns back around. Before you take any action, make sure you have
carefully considered all of the options available to you. By doing so, you may
well be able to turn a dip in the market into a big return once the market
starts the climb back to the top.

ips for Selling your Home during the Real Estate Market Crash

Many experts are advising that it may be best to wait before you try to sell
your home in the current market. There are certainly many reasons for this type
of advice. The market in most areas remains rife with inventory. Prices have not
yet stabilized and as a result many markets are continuing to experience price
declines. This is not expected to change at least for several months. In some
cases it could be next year before markets begin to stabilize. Thus, the theory
exists that it does not make sense to sell at the moment when markets could
likely stabilize soon. In some situations; however, sellers may not be able to
wait before they sell. If they are facing a foreclosure, medical situation or
must relocate for work; there simply may not be any other alternative but to
attempt to sell their home in the current market.

If you find yourself in this type of situation, then it is important to know
what you can do to sell your home in the current environment despite the real
estate crash. The first thing of which you should be aware when selling in this
climate is that caution should be exercised with home improvements. Just a few
years ago sellers could expect to recoup quite a bit of money for making home
improvements when they sold their properties.

This is no longer the case. In fact, many experts are now pointing out that
buyers are more interested in homes that are clean, neat and presentable than
homes that are high-end. The most common mistake that many sellers make when
selling their home in the current market is adding the cost of the remodeling
to the sales price. Essentially, these sellers are asking the buyers to pay for
the cost of the remodeling. While this might have worked in some markets a few
years ago, it simply will not today.

Therefore, before you make any improvements to your home for the purpose of
selling it, it is a good idea to seek professional advice. Ideally, this should
be done a few months before you plan to put the home on the market. By seeking
professional advice, you can learn where to spend your money to get the most
bang for your buck. In most cases this will be paint and flooring; however,
this can vary from market to market.

Another area that can be worth it to spend the money is obtaining a home
inspection before the property goes on the market. In the past, home
inspections were not performed until a contract was actually on the market and
then it was paid for by the buyer. In today's market; however, buyers have the
luxury of being more selective. Obtaining a home inspection can set your home
apart from the rest and provide peace of mind to buyers.

In addition, you should make sure you pay attention to the exterior of your
home as well as your lawn. Siding and windows, in particular, are an important
area on which to focus.

While in the past, kitchens were a major area on which to focus for home
improvements because most sellers could expert to recoup most if not all of the
cost, this has also changed in light of the existing market. Unless you cannot
avoid it, replacing dishwasher, stoves and refrigerators is not advisable.

What you Can Do in the Current Real Estate Market

As real estate markets continue to decline around the country, many homeowners
are wondering what they can do to protect themselves and the investment they
have made in their home. There are actually many different steps you can take
to make sure you stay ahead of the softening real estate market.

One of the first steps that should be taken is to check with either your city
or county property tax office to research your current tax assessment. This
will tell you what the county or city states your home is actually worth. You
should then compare this rate to what your home is currently worth based on
current market conditions. It is not uncommon for homeowners in several states,
such as in California, to discover that they are paying more money in property
taxes than they should be based on the value of their home in the current
market.

In some states, homeowners are actually paying up to 40% more than they should
be. If you are not sure of your home's current value in the existing market, it
is also a good idea to have your home appraised to determine its current value.
Taking both of these steps will give you a realistic idea of the value of your
home in the current market and ensure that you are not paying more money in
taxes than you should be.

If you do have an adjustable rate mortgage it is certainly worth it to consider
refinancing your mortgage to a fixed rate mortgage. Before you actually
refinance; however, there are several steps which you should take first. Begin
by inspecting your existing mortgage documents to determine whether you will be
penalized for paying off the existing loan early. While you will be taking on a
new loan, your existing loan will be paid off when you refinance it and this
could subject you to penalties is such a clause exists in your mortgage
documents.

In some cases, you may discover that you actually owe more on your home than it
is worth. This is actually quite common now among homeowners who took out exotic
mortgage loans a few years ago when prices were rising rapidly and the market
was red hot. Today; however, this can cause quite a bit of dismay among
homeowners who are facing large mortgage payments on homes that have dropped
rapidly in value. While it is anticipated that the market will begin to
stabilize sometime next year, you will need to give some careful thought to
whether it would be in your best financial interest to simply walk away from
such a situation and try to start fresh.

Additionally, you need to consider how long you plan to remain in the home and
balance out that time in comparison to the amount of closing costs you will
need to pay when you refinance your home. While a number of mortgage companies
advertise 'no cost' refinance loans you should be aware that such loans rarely,
if ever, exist. The costs for refinancing your loan are typically financed in
with the loan under this type of arrangement. This means that instead of paying
the costs for the loan up front you will be paying interest on them throughout
the duration of the loan. In addition, it is important to research any mortgage
company you consider to ensure there have been no complaints filed against them
before you refinance your mortgage.

If you plan to remain in your home, it is also a good idea to check your
homeowner's insurance policy to be certain that it is up to date. This can
prove to be critical in the event you suffer any type of loss on your home in
the future. If you live in an area that is susceptible to hurricane or storm
damage it is especially important to make sure that your policy accurately
reflects your home in its current state.

Foreign Buyers Providing some Relief to the Housing Market

Economic news around the country has certainly appeared to be dim in the last
few months. As if the housing crisis was not enough, now it appears that the
country is in the midst of a recession. The dollar has weakened and many
consumers find themselves wondering whether relief is in sight. Quite
surprisingly, these problems may actually provide some encouragement for
foreign investors to rally the housing market.

One of the reasons that many homeowners are finding it difficult to sell their
homes is the fact that many would-be buyers either cannot afford the prices or
they cannot qualify for mortgage loans. As a result, they have found they have
little choice but to continue to rent and wait for the housing market to
stabilize before they venture into the home buying process. Some homeowners are
finding interested buyers in a surprising source; however. Today, homeowners are
just as likely to discover buyers hailing from abroad as from next door.

Experts speculate that investment from Europeans is likely to increase in the
coming months. Many speculate that foreign investors have recognized the value
in buying homes in the U.S. Prices have declined, making them far more
attractive. In fact, in some cases, foreign buyers could be poised to replace
the niche that first-time home buyers held before they were squeezed out of the
market as a result of the recent real estate crash.

If this trend continues, it could very well provide some relief for homeowners
who either need to upgrade to larger homes or who need to get out of homes they
can no longer afford.

Brokers are reporting that inquiries from foreign investors are definitely on
the rise. Compared to the number of inquiries that were received just a year
ago, many brokers are seeing an increase of as much as five times the amount
witnessed just a year ago.

A foreign buyer who invests in a home today would need far less money in terms
of euros to make a substantial down payment on a home as a result of the
weakening dollar. In fact, foreign buyers today could make what is essentially
a $50,000 down payment for little more than 34,000 euros today. A year ago that
same buyer would have needed nearly 38,000 euros in order to offer the same
amount for a down payment. Quite simply, foreign buyers are able to buy homes
in the U.S. for less of an investment than American buyers.

The exchange rate has definitely provided support for increased spending power
in many locations. In certain areas, like New York and Chicago, the demand has
definitely increased. In some cases, the demand has grown so much that it is
actually outpacing supply. California and Florida are also proving to be
popular with foreign buyers and investors. The latter two markets, which have
been among the hardest hit, are embracing the relief with open arms. Florida,
in particular, is still struggling with the crash of the condo market.

Sellers and agents have quickly latched onto the idea that the place to look
for interested buyers could very well be overseas. As a result, many properties
are now being marketed specifically toward foreign buyers. High-end luxury homes
that have languished on the market for months are some of the first to be
targeted for interested foreign buyers.

The Internet has proven to be a successful marketing tool in the past and today
agents and sellers have discovered it is often the easiest way to reach foreign
buyers. Compared to other advertising mediums it is often far less expensive
and allows them to reach a broader audience. When marketing properties toward
foreign buyers, this can be particularly important.

Foreign buyers may not be the full salvation that real estate agents and
homeowners need to completely recover from the housing bust; however, they are
certainly providing a bit of welcome relief in many beleaguered markets.

Using Seller Concessions to Fight the Real Estate Market Crash

During the last few years before the market started to turn downward, it was
virtually a guarantee that you would be able to sell your home if you put it on
the market. In fact, there were many markets that were a virtual hot bed of
activity, with bidding wars inciting prices well above the asking price. The
low interest rates at the time were all the encouragement buyers needed to
start snatching properties at a historic rate. As a result, numerous investors
were able to double the investment they had made in short period of time.

As many predicted would happen; however, the real estate bubble did indeed
burst and many are predicting that the market of 2008 will make the preceding
two years seem like a cakewalk. Once hot markets have declined rather rapidly,
leaving investors and homeowners alike wondering what they can do to sell their
properties as loan underwriting guidelines tighten and the market floods with
inventory.

If you find that you absolutely cannot wait until the market turns around to
sell your property and must sell it now, your best hope may be creative
marketing tactics.

The first thing that must be understood about the current market is the fact
that the market is rife with choices. A few years ago buyers felt a decided
pressure to move and move quickly when searching for a property. Choices were
few and the best properties were likely to be snatched up as soon as they hit
the market. Today that is not the case. There are far many more properties on
the market, prices are lower and buyers know they have the advantage of being
able to take their time looking. This means if you are going to be competitive
in selling your property, you will need come up with something that will set
your property apart and entice buyers.

In the last few years before the market crashed, sellers had no need to use
seller concessions. In areas where the inventory is high; however, seller
concessions are becoming far more common. Basically, a seller concession is
anything that a property owner uses to curry favor with buyers. The range of
possible seller concessions varies quite a bit. For example, you might provide
a decorating allowance if your carpet is outdated or even provide a
contribution toward closing costs in order to encourage first-time home buyers
to consider your property.

In the past these types of concessions were not usually offered until buyers
and sellers were in the process of negotiating. In most cases, such concessions
would not even be offered until something turned up in the inspection. That does
not mean that they cannot be offered during marketing; however, in order to
attract prospective buyers.

The key is to recognize that the balance of power has definitely shifted.
Buyers hold the upper hand right now and sellers must be prepared to do what
they can to attract them. If you have already taken certain steps to move your
property such as pricing it aggressively then you may wish to consider making
some concessions to increase the interest of buyers.

One option would be to pay points for the buyer. This is actually a situation
that provides a win for both buyers and sellers. Let us say you have a property
listed at $150,000. If you slashed the price 3% then you would be taking $4,500
off the price. You could use that same amount of money; however, to purchase
mortgage points for the buyers. In fact, you might even find that you can
purchase a substantial amount of points for a bit less money. This strategy
would allow buyers to obtain a much lower interest rate and as a result a far
lower monthly payment. This would make your home more affordable than similar
homes in the neighborhood and may just provide the incentive buyers need to
snatch up your home.

Homeowners Face the Reality of Negative Mortgages

The idea of being upside down on a vehicle is not that new. This commonly
occurs when a consumer makes the decision to purchase a new vehicle before they
have paid off their existing vehicle. As a result, the balance of the loan on
the existing vehicle is added to the note for the new vehicle. The result is
that the consumer owes more on the new vehicle than it is actually worth.

Today, many consumers are finding they are now upside down on their mortgages.
Unfortunately, this did not occur because they bought a new house and added in
the cost of their old home to the new mortgage. This situation occurred in many
cases because of the rapid rise of home values in many areas followed by the
real estate market crash that sent home values subsequently spiraling downward.

In many markets, especially in California, the majority of homeowners are now
actually upside down on their mortgages and that number is increasing rapidly.
A large number of these homeowners are consumers who purchased their homes at
the peak of the boom. During that time home values doubled and even tripled
within a short period of time in many areas. This situation leaves many
homeowners wondering what they should do. Options are often based on whether
the homeowner is able to continue making their monthly mortgage payments. While
some are able to pay their monthly mortgages, especially if they have a fixed
rate mortgage, that is not the case with others who took out adjustable rate
mortgages.

Homeowners who can still afford their monthly mortgage payments and who are not
feeling the pressure to sell due to employment reasons may find they are better
off by riding out the market decline. There is a wide belief that once the
market bottoms out it will begin to rebound. If that occurs, these homeowners
could still be poised to make a profit on their home once the market does
rebound.

Other homeowners are not so fortunate; however. In some cases, homeowners
simply have no choice but to move now rather than wait as a result of
relocation or job loss. Homeowners who have adjustable mortgages may also find
they are simply no longer able to afford their mortgage payments as they
continue to rise. These homeowners are now facing the bitter reality of
foreclosure when they are not able to pay off their debts or refinance their
home loans because of tightening loan restrictions.

Homeowners are also facing the reality that their options are reduced because
they have little if any equity in their homes. The amount of equity that a
homeowner has in their home is often determined by the amount of their down
payment. During the housing boom it was quite common for many buyers to
purchase homes with very little, if any, down payment. At the time it seemed
like a good deal; however, today it is causing significant problems as housing
values continue to decline.

This situation is causing further problems for homeowners who would like to
take out home equity loans either to make necessary home improvements or to
consolidate higher interest debts. Even if they are among the few homeowners
who do have equity in their home, they are finding that lenders are
increasingly wary of making home equity loans. Just as the default rate on
mortgage loans have increased, so has the default rate on home equity loans.
Quite simply, lenders are no longer willing to take on risk when they are
already holding a number of defaulted loans.

The ability to refinance has also dwindled in many locations. Not only are loan
guidelines becoming stricter but most homeowners who are upside down are
frequently finding the lower value of their home makes it nearly impossible to
qualify for a new loan. In essence these homeowners now have negative equity
and lenders are simply not willing to take on that risk.

Investors and Speculators Affected by Housing Market Crash

While homeowners are facing the crunch of the housing meltdown, investors are
also facing serious repercussions as well. The housing market certainly hit is
peak during 2005. A number of investors came into the market at the end of 2005
and in 2006, eying the large profits that had been made as a result of the
housing boom. At the time the market was quite frenzied and some investors felt
all they had to do was quickly snatch up hot profits and resell them as quickly
as possible. This strategy produced quick fortunes in many cases and fueled the
trend of flipping. Even people who had not had any previous experience in
renovations or the real estate industry were quick to become involved.

Today that once frenzied market has begun to not only level off; however, but
have completely run out steam. Investors are finding it difficult to sell
properties let alone make a profit as the market continues to experience a glut
of inventory. There is little doubt about the fact that the market for flipping
has slowed.

Investors have also begun to lose money as a result of the housing crisis. One
of the key strategies of being able to make a profit in the process of flipping
is to sell the property fast enough that the investor does not need to make any
mortgage payments at all or at least as few as possible. During the heyday of
the housing boom this was not a problem.

An investor could easily purchase a property, rehab it in less than a month,
slap a for sale sign on it and sell it before the first mortgage payment was
due. Even if they sold it before the second mortgage payment was due they were
still able to come out of the deal with a massive amount of profit because of
rapidly rising housing prices. Today that is no longer the case.

As a result, many investors are finding that they must either live in the homes
on their own or rent them out. Investors who had been renting have been forced
to move out of their rental properties in some cases and live in the properties
they hoped to flip. In other situations investors have been forced to rent out
the properties for reduced rates in order to have at least a little money
trickling in to cover mortgage payments and other expenses.

Speculators are experiencing even more problems. The main difference between
flippers and speculators is that flippers frequently purchase homes, try to
infuse it with some increased value through renovations and then sell it.
Speculators; however, tend to purchase properties and then resell them without
making any improvements at all. At one time this practice often paid off in big
profits. That is not the case today. Investors who once engaged in the process
of real estate speculation have discovered they must add value to the property
if they are to have even a glimmer of a hope of selling it today.

As a result of the glut of homes on the market due to speculation and flipping,
there are some markets that are attempting to eliminate the process all
together. Some communities have placed restrictions on the abilities of buyers
to resell their home within at least one year period following the date they
close on their property.

Since most speculators and investors hope to sell within six months or less,
this effectively prevents them from doing so. Communities that had the
foresight to take this action at the height of the housing boom have been in a
much better place than other communities where flipping and speculation ran
rampant at the same time.

While the depressed housing market has caused many investors to step out there
is little doubt that once the market corrects itself, which many believe will
happen by 2010, these investors will return; poised and ready to begin reaping
in the profits once again.

Consumers Benefit from a Renter's Market

More and more consumers are recognizing that at least for right now they are
better of financially renting than buying. This is certainly a departure from
the past when most consumers realized that the best financial option would be
to buy rather than rent so that their money would go toward creating equity in
a home.

Today that is no longer the case; however. While rents have continued to rise
in many locations, consumers are still finding they are often able to rent for
less money than what they would pay for a monthly mortgage payment on a
comparable property. In some cases, renters are able to save between 40% and
50% by renting instead of buying.

One of the reasons for this is that in some locations, property values rose
quite steeply. Today, buyers who snatched up those homes without blinking have
discovered they must now sell. The problem? They need to sell the homes at the
prices at which they purchased them two years ago to recoup the balance they
owe on the mortgage. Renters just are not willing to pay more money than a home
is worth.

Even renters who are able to qualify for mortgages just do not feel as though
they are getting enough home for their money, especially when they can often
rent a comparable or even larger home for less money.

As a result of the shifting market, many experts are quick to point out that
today the market is no longer a seller's market and it is not really a buyer's
market either. Instead, it has become more of a renter's market.

Other renters are holding off on the idea of buying because they are concerned
that prices have not yet hit the lowest point. They are primarily concerned
that if they purchase a home today it may not be worth the same amount just six
months from now. They feel it is far more prudent to wait and see exactly where
the housing market will land before they consider buying a home. Other renters
are concerned about the upcoming hurricane season. Few have forgotten the
hurricane season of just two years ago that devastated many areas. Homeowners
in those areas, especially those without insurance, have yet to recover.

While some areas are experiencing a deficit in supply of rental properties, in
other areas homeowners have recognized the wisdom of holding off on selling
their homes. They, too, are reluctant to sell their homes now when it seems
more prudent to wait and see when the market will stabilize. To help make ends
meet, many of these homeowners are willing to rent out their homes to the
scores of renters lining up to take advantage of the opportunity. Even homes
that are on the market for sale are also available for rent. While renters must
accept the reality that the home in which they are living must be available for
showings, they still feel the trade-off is quite worth it.

Would-be investors who attempted to get in on the quick profit potential of
flipping homes have also discovered that it makes more sense to rent out their
properties right now instead of trying to selling them. In some cases,
investors are discovering they simply do not have any other options when they
must meet mortgage payments every month and are unable to sell their
properties. In some cases, this means renting the properties at a loss,
creating a negative cash flow.

In fact, this situation has become so much of a problem that landlords in
certain niche markets are finding they must cut rents in order to create even a
small amount of cash flow. These investors have quickly discovered that it is
far better to rent right away at a loss than wait several months to try and
attain the amount of rent they really need. Although landlords are often upside
down on most of these properties, renting them out has proven to be the safest
method; at least for now.

Tips for Investors to get through a Real Estate Market Crash to the other Side

There is little doubt about the fact that a real estate market crash can be
frightening for everyone; especially investors. When the market is good, it's
great; however, when it starts to slide it can be more than a little stressful.
Many new investors often look to veteran investors and wonder how they are able
to make it through the ups and downs of the real estate market year after year
and come out relatively unscathed.

The truth of the matter, of course, is that many investors do not come out
unscathed. Many become frightened at the first sign that the market may be
about to slide and quickly exit before they become burned. The real secret to
being a successful real estate investor lies in sticking it out through the bad
times as well as the good times.

So, what do you do when the market does experience a downturn? How do you make
it through it in order to take advantage of all the benefits when the market
finally goes back up again?

First, try to avoid selling in a down market. Suppose the property that you
have purchased for investment does go down in value. The best approach is to
try to hold onto it until the market returns and your property goes back up in
value. This can certainly be frightening and stressful at the time; however, if
you examine the cyclical nature of the real estate market you will discover that
it always comes back. The amount of time it takes for it to return can vary;
however, real estate always bounces back.

One of the most common reasons that many investors sell when the market is in a
downturn is that they are afraid the market will worsen. Of course, there is
always that possibility. It has to hit the bottom before it can begin the climb
back to the top.

Selling during this particular phase of the market is often an emotional
decision and one that is frequently not well thought out. There are even some
cases in which investors who sell during a down market find they must scramble
to come up with the costs necessary to close the deal. Stop and consider for a
moment the anatomy of such a decision.

The market has turned down and you are concerned it will get worse before it
gets better. So, you sell the property at a price that is far below what you
paid for it and perhaps even what you have it mortgaged for. The person who
buys the property waits it out and once the market returns, which it will, they
are able to take advantage of the great deal they made and ultimately turn a
great profit.

Instead of selling, an alternative option would be to hold onto the property
and rent it out. Historically, there are always more renters during a down
market than buyers. Why? Simply put, when the market is down many first-time
homebuyers find they are frozen out of the market because lenders are more
conservative and write fewer loans due to more restrictive underwriting
guidelines. Since everyone still needs a place to live, many of these people
wait out the market by renting. If you do sell during a down market, make sure
that it is because you have given it plenty of thought and not because you are
reacting to emotion.

Beyond waiting out the market downturn it is also a good idea to make sure that
you put aside some cash when possible. When you are already in the middle of a
slump that can be difficult to do; however, when the market turns around again
make sure that you put aside a little extra money in the event you experience a
turn in the market. The extra money can provide you with a cushion until the
market settles as well as ensure that when the market does turn around you have
options available to you.




How to Remain Competitive in a Down Market

The real estate market was hot for so long that many agents who entered the
real estate industry during this time period do not have any experience with a
buyer's market. Until the recent real estate market crash, the market
definitely favored sellers. Homes sold quickly and in many cases homes sold for
prices above the listing price. As a result, buyers learned they had to move
quite quickly. In fact, it became quite routine for buyers to waive inspections
and other basics in a bid to move forward as quickly as possible. These buyers
were quite well aware that it was common during this time for sellers to
receive multiple offers. In some cases this could easily escalate into a
bidding war.

As the real estate market continues to drop; however, the rules have changed
and buyers are now holding the power. Whereas they once wanted to move quickly,
they now have the luxury of taking their time. In order to succeed in the
current market, agents must be certain they understand the elements of this
market.

While it was quite possible to make a large sum of money by simply showing a
few properties back when it was a seller's market; that is no longer the case.
You must be prepared to face the realities of the existing market in order to
survive it.

One of the realities that should be faced is the fact that homes in the current
market will typically take at least six months to sell. In some cases, it may
take much longer to sell properties. Compare this to homes that sold in a
matter of hours or days when it was a seller's market, and it quickly becomes
apparent how much the market has changed. There are steps that can be taken
combat this problem including ensuring that properties have the most exposure
possible, especially web exposure. Consider offering virtual tours and using
multiple, high-quality photographs. You might also think about increasing
commission fees to buyer's agents who make your listings a priority.

In addition, as you face the reality of the current market you must also make
sure that sellers face it as well. Many sellers continue to operate under the
idea that they will be able to achieve the same level of prices that were
typical not that long ago. As a result, many buyers are unrealistic about the
prices they hope to achieve. It is critical that you gently introduce sellers
to the reality of the current market. At any given time, the current market has
about a six month back load of inventory. Even in markets which have not
experienced as much of a downturn as other markets, it is essential for
properties to be priced accurately or they will usually remain on the market.

As the market shifts, you may also find that you need to shift your marketing
plans. Specifically, it should be understood that most areas are now in a
buyer's market. This means, that more time will need to be given to developing
buyer leads in order to liquidate the bulk of inventory that is currently on
the market. This is not to say, of course, that you should not take new
listings; however, to balance out those listings you must work to bring in
buyers as well. One great place to look for buyer leads, especially first-time
buyers, is actually rental properties. During a down market, there are usually
more renters than homeowners.

Most people do not rent out of choice. If they can see that it is to their
advantage to buy and can be provided information that will help them to see how
buying can be a reality, most people will choose home ownership over renting.
Consider offering seminars that are free of charge at your office on the topic
of home ownership. Print up fliers and provide advertisements in the local
newspaper.

Using Creative Tactics to your Advantage While Selling in a Down Market

The real estate crash of 2008 appears poised to make the downtown of the last
couple of years look like nothing at all. While the market crash is certainly
disturbing, real estate market crashes are really not anything new. The real
estate crash of the late 1980s certainly caused plenty of concern. During that
time; however, many investors learned to use creative marketing strategies in
order to survive the crash. Whether you currently have a property in a market
where sales have slowed down or you need to move your property off the market
quickly, there are strategies you can employ in order to avoid becoming a
victim of current market conditions.

During the market crash of the 1980s many sellers found it helpful to offer to
pay some or even all of the closing costs for the buyer. In many situations
this can be a highly successful tactic; however, it does not work in all
situations. In some cases, the lender may place limits on the concessions the
seller is allowed to make. This is often the case if the buyer is purchasing
the property using a Fannie Mae or Freddie Mac loan.

These loans are often attractive to many buyers because they are able to make a
lower down payment. In return; however, sellers are frequently limited to
concessions of 3% of the total amount of the sales price if the buyer is making
a down payment of 10% or less.

In this case, you may need to come up with an even more creative strategy in
order to sell your property. One option that many used during the market crash
of the 1980s was to raise the price of their property. At first glance, this
strategy may certainly seem as though it would be counter-productive. In
reality; however, it is a very creative way for you to provide assistance to
the buyer with their closing costs.

Here is how this strategy works. Basically, you agree on a price with the buyer
and then raise the price by a certain percentage. That money is then given back
to the buyer during the closing. On a $150,000 home with a 3% price increase
that would amount to $4,500. This money would go directly to the buyer and help
them in paying their closing costs. In return, the buyer would obtain a loan for
$154,500 and essentially be able to cover their closing costs using their
mortgage.

For this tactic to work the home must be appraised for the higher price in
order for the buyers to be able to obtain the mortgage loan. Of course, the
buyer must also be willing to pay the higher asking price and understand that
their monthly mortgage payment will also be slightly higher as a result.

Many sellers are reluctant to make any concessions at all, preferring to try to
obtain as much money as they can from the asking price for their property. In a
down market; however, it is important to keep in mind that basically every
month the property sits on the market is costing money. Over a period of
several months this could ultimately amount to far more money out of your
pocket than you would give up by making concessions early on in order to sell
your property as quickly as possible.

Tips for Homeowners and Buyers to Protect Themselves

The first signs of the impending real estate crash were noticed in 2005. In
2007, the market began to tumble and since that time literally thousands of
brokers and bankers involved in the mortgage industry have gone out of
business. Despite the dire conditions of 2007; however, signs indicate that the
national market could fare even worse during 2008. Many experts in the industry
are specifically concerned that the number of home foreclosures will rise
dramatically and commercial real estate will become pinched even worse than in
the preceding months.

While this news is certainly disturbing, it is important for homeowners as well
as home buyers to understand that there are steps they can take to help protect
themselves from the impending real estate crash in 2008.

First, make sure you understand exactly what kind of mortgage loan you have and
the implications of your mortgage type. While adjustable rate mortgages were
certainly attractive a few years ago because they allowed homeowners the
benefit of lower interest rates, today they are a disaster waiting to happen.
If you have an adjustable rate mortgage, it is essential that you consider
obtaining a fixed rate mortgage.

If you have your house on the market and are experiencing difficulty selling
it, as is the case with many sellers, recognize the fact that you may need to
make some concessions on the terms and/or the selling price. The market is rife
with inventory right now and buyers are able to choose what they want and on
their own terms. If you want to be one of the sellers that is successful in
selling their home, you will need to lower the price and possibly even toss in
a few extras to move your house off the market. If you cannot lower the price,
think about whether you might be better off financially to rent the home over
the course of the next two to three years.

The impending real estate crash will also most certainly impact prospective
buyers as well. While there is a tremendous amount of inventory currently 
available and prices are lower than they have been in several years, it 
certainly appears as though there will be even more price reductions throughout 
the remainder of 2008. In some areas, prices could go drastically lower. This 
means that if you can wait awhile longer to buy a home you may be able to take 
advantage of even lower prices.

As a buyer, you also need to make sure you give careful thought and
consideration to the type of mortgage loan you take out to ensure you do not
become caught up in the real estate crash. If you are a first-time homebuyer
and/or you have a credit rating that is less than favorable, it is a good idea
to consider taking out a FHA mortgage. If you are a veteran, a VA mortgage is
also a good option. Both of these types of mortgage products offer terms that
can be more attractive in the current market than other types of mortgage
products.

Keep in mind that while there are still numerous 'no cost' mortgage loans being
advertised, it is imperative that you research such mortgage offers carefully
before you try to take advantage of one. In most cases, there is really no such
thing as a 'no cost' loan. The costs are usually added back into the mortgage
and that means you will be paying them off at a greater cost over the term of
your loan.

The Mortgage Slump Hits Home Renovations and Home Equity Loans

Back when the housing market was still booming, many homeowners took advantage
of the opportunity to renovate their homes. At the time it certainly seemed to
make sense. Interest rates were low; loans were usually easy to obtain and
homes were selling like hotcakes. Therefore, many homeowners easily made the
connection that it was the ideal time to renovate their homes to include
higher-end features. These homeowners reasoned that if they decided to sell
their homes they would be able to easily recoup the cost of the home
improvement.

In most cases, home-equity loans were used to finance these home improvement
projects. A home-equity loan is a special type of loan which allows homeowners
to take out a form of second mortgage on their home against the equity they
have built up in their homes. Due to the fact that home values were
skyrocketing in many areas, homeowners suddenly found themselves awash in
rapidly rising equity. That, combined with low interest rates, made it quite
easy to borrow thousands of dollars to put toward home renovations. In fact,
many homeowners found no trouble at all in borrowing up to $100,000 or even
more to fund various home improvement projects.

During this time kitchen renovations and upgrades wee particularly popular.
Granite countertops became the standard for the day and all high-end homes and
even those that bordered on the fringe of being high-end were suddenly being
renovated with granite countertops. High-end appliances, especially those
produced by Viking, also became quite popular. Homeowners speculated that
adding such high-end features to their homes would raise the value even higher.

In many cases, homeowners were able to recoup at least 80% of the cost of those
renovations. In other areas, it was not unheard of for homeowners to recoup
almost 100% of the cost of the renovation. Taking into consideration a couple
of years of use of the renovations and all together, most of these homeowners
found it was quite a good deal.

Today; however, the boom has finally ended and many homeowners are finding that
those home improvements are more expensive than they ever dared dream. There is
suddenly so much inventory on the market from which buyers can choose; however,
that they are no longer as impressed with such features as they once were. As a
result, even upscale improvements and additions are now recouping less than 70%
of their actual cost. There is no doubt that the return for higher-end
renovations has certainly declined quite quickly.

This provides critical advice for homeowners who are thinking of renovating
their homes in the current market. This message is that if you are planning to
renovate your home, you should not go over the top; especially if you think you
will be selling in the next three to four years. In most cases you simply will
not be able to get the money back when you sell.

You should also take into consideration the fact that home-equity loans for the
purpose of renovating homes are not easy to come by as they once were. Just a
few years ago it almost seemed as if lenders were begging to give away money.
Interest rates were so low, most homeowners felt as though they were being
foolish if they did not borrow money against the equity in their homes. Like
the rest of the mortgage industry; however, the default rate for home-equity
loans has increased sharply. As a direct result, lenders are being far more
cautious today about making home-equity loans.

Guide to Protecting yourself Against Future Downturns in your Local Market

While news of the housing crash is making headlines in most papers and front
lining the evening news there still remain a few markets where the crash has
not made as much headway. If you live in one of these markets and you have not
yet been affected by the real estate market crash, be aware that you may not
have as much time to respond as you think when the market in your area begins
to slide downward.

This is because a market can practically spin on a dime and go from being quite
healthy to being practically dead. As a result, you could find yourself holding
a property that you are unable to sell. If this is an investment property, this
could be quite serious; however, even if it is your own personal residence, it
could still cause problems if you need to sell for a profit for some reason.
This is why it is imperative to make sure that you protect yourself now so that
you will have options available to you in the event the market does begin to
crash in your area.

The first step that should be taken to protect yourself and your investment is
to change from an interest-only loan or adjustable rate mortgage to a fixed
rate mortgage. A fixed rate mortgage will provide you with the opportunity to
tap into lower, more secure rates. In the event that rates continue to rise and
do so sharply, this can provide you with some peace of mind.

In addition, you need to take steps to ensure that you will be able to afford
to remain in your primary residence. In the event that you do not foresee a
move in the near future, there should not be any real concern regarding whether
the value of your home goes up or down right now. If you plan to be in the home
for some time, it is important to recognize that it is really more than just an
investment. In addition, it is quite likely that the market will stabilize
eventually and the value of your home will stabilize as well. However, if you
find it difficult to make your housing payments every month or you think you
may need to relocate soon, then you should consider selling the property and
moving now before the market in your area slips any further.

Furthermore, you need to ensure that your savings are safe. It is important to
recognize that financial institutions do typically invest quite heavily in real
estate. If the housing crash continues in the same vein, your investments could
be at risk. Savings and loans and banks are the most at risk. To ensure that
your investments are safe, it is a good idea to obtain an analysis rating of
your bank or S&L.

In addition, it is important to focus on current and future investments. During
this time conservative investments are likely to be the smartest investments to
make. These investments include Treasury bills and CDs as well as foreign
currencies which are strong.

Taking steps now to protect your investments and protect yourself against
future possible downturns in the real estate market in your local area will
help to guard you against possible risk.

Once Hot Markets Begin to Cool

As the housing crunch affects numerous markets around the country, there have
been some markets that have been able to blissfully continue with rising home
values and rather quick sales. There is some evidence that the housing market
crash is finally beginning to penetrate those markets; however. That is
certainly the case in cities like Provo, Utah. Even homes that would seem as
though they would be rapidly snatched up are sitting on the market with no
takers. This has been quite a surprise for homeowners in such markets.

Most homeowners were impacted by the sliding market in 2006. Other markets;
however, continued to experience price increases. In Provo, for example,
average home prices rose a staggering 14% within a short period of time,
compared to preceding home values.

Homeowners in previously hot markets are discovering that they must now resort
to creative selling tactics and offering concessions to attempt to move their
homes off the market. Just a year ago these homes would have been sold within a
matter of weeks. Today these homes are sitting on the market for months at a
time. In desperate bids to sell their homes, sellers are slashing prices by
thousands of dollars and even offering discounts to buyers who can close
quickly or who are willing to work without an agent; providing sellers the
opportunity to save on commission fees.

The message is certainly clear. While these markets were once hot, no market is
immune to the housing bust. Even markets that are still experiencing price
increases are finding that prices are not rising as much as they were in the
past. Clearly these markets are beginning to lose steam. In addition, the rapid
pace of sales that once marked these areas is beginning to slow down as well.
Tighter loan restrictions as a result of the subprime mortgage crisis are
likely affecting many of these markets. It is simply difficult to sell homes
when buyers are unable to obtain loans.

In most cases, the economy is the one factor that is not affecting these
markets. This is certainly the case in Utah, where the economy has managed to
remain strong. Despite this fact, the housing market is stalling.

Seattle is another previously red hot market that appears to be stalling as
well. While Seattle is certainly still nowhere near the frantic freefall of
many other markets, prices are simply not rising as rapidly as they once did.
Like many other markets, homes are not selling as quickly as they did last year
either. Foreclosure rates have also begun to increase in Seattle in the last few
months.

Despite this fact, experts are quick to point out that Seattle should be able
to miss the collapse that has affected many other markets throughout the
country. The apartment market in Seattle, in particular, looks as though it
will continue to remain strong in Seattle even while home prices begin to
settle somewhere closer to reality. Overall, inventory amounts are higher than
they were last year; however, sales volumes continue to outpace other states.

One of the reasons that Seattle and the bulk of Washington state has been able
to avoid the real estate market collapse that has affected the rest of the
country is the Growth Management Act the state enacted. This act prevented the
development of construction projects in the state as the same rate that
occurred in many other states. While other states were building at a rapid
rate, Washington was being reigned in.

This turned out to be an advantage for Seattle and other areas in Washington.
In markets that experienced a sudden rash of construction, once those projects
were completed the market had already begun to crash. As a result, newly
completed construction projects were suddenly left vacant with no buyers in
sight. Construction loans suddenly began to join the throng of defaulted loans
clogging the market.

Market Conditions Continue to Vary Widely

While there are few markets in the country that have managed to survive the
current housing market without any battle scars there are some markets that
have experienced more serious issues than others. Two of the worst markets in
the United States at the moment are Cleveland and Detroit; however, they are
definitely not alone when it comes to markets that are falling with no end in
sight any time soon.

By and large, the riskiest markets at the moment are those that are
experiencing the highest rates of foreclosures. Other factors that are
contributing to problem areas include high rates of job loss and slow job
growth. Markets in which the number of homes for sale is rapidly rising are
also experiencing significant problems. Rapidly rising property values just a
few short years ago is also proving to be a stumbling block for many markets.

During the housing boom these markets commonly experienced property value
increases of two-fold and even three-fold in many cases. Once the boom ended;
however, these markets began to fall and as of yet, they have not hit the
bottom. These markets are also at greater risk for problems due to the large
presence of adjustable rate mortgages.

During the housing boom, as prices were escalating quickly, buyers frequently
took advantage of adjustable rate mortgages to obtain even lower interest rates
to make their housing payments more affordable. This was quite common in areas
where first-time home buyers were struggling to afford the rapidly rising
prices of homes.

The subprime mortgage market is also more highly concentrated in these areas of
the country. Lower interest rates at the time prompted many people to rush out
and buy homes. Unfortunately, the credit profile of many of these buyers was
less than sterling. Mortgage loans made in these markets during this time
frequently involved subprime, adjustable rate mortgages. As the market began to
fall, interest rates began to increase. Today, those same homeowners are finding
they can no longer afford their mortgage payments. The result? Foreclosures have
risen sharply in market areas where the boom once allowed housing values to
double and even triple practically overnight.

Economic conditions in many areas have further fueled the crisis. As the number
of layoffs increase, the number of foreclosures and homes for sale seem to
increase as well.

At the moment, the ten worst housing markets in the country are Sacramento, New
Orleans, Detroit, Riverside-San Bernardino, Las Vegas, Tampa, Miami, Cleveland,
Phoenix and Jacksonville, Florida.

Sacramento, considered to be among the top ten of the worst housing markets,
has experienced a drop in homes prices that is well above the national average.
Like many other housing markets in similar situations, Sacramento fell victim to
a fast paced market and subsequent plummeting pricing. Today the median home
price for homes in Sacramento remains far above other markets in the country,
despite the worsening situation. Given the large number of houses on the
market; however, this is far from good news.

In spite of the situation in Sacramento; however, it is definitely not the
worst case scenario at the moment. That honor goes to Detroit, where market
prices have experienced a drop of more than 7%. The key factor in Detroit is
the massive amounts of layoffs stemming from the auto industry. Matters are not
much better in Cleveland where median prices have also dropped by several
percent and inventory continues to rise.

While these markets are not showing any signs they will rebound in the near
future; there are some markets; however, which are actually posting increases.
Seattle is one such market. Median home prices in Seattle have actually risen
almost 9% in the last year. Other cities on the rise include Raleigh and
Charlotte in North Carolina as well as San Jose, California. San Francisco is
not far behind, garnering an increase of more than 7% in the last year.

Real Estate Market Crash Effects Divorces

Pick up any newspaper today and you are likely to see at least one article or
sidebar discussing the mortgage crisis. While there are still a few markets
that have remained relatively untouched by the crash of the subprime market,
most areas throughout the country have felt the impact in some way or another.
As a result, there are few homeowners that have not felt the pinch of the
crash. The ability to move on with life is being greatly impacted by the
souring market for many consumers. Divorcing couples, in particular are finding
that real estate market problems are preventing them from moving on with their
lives.

It is not uncommon for many couples who are divorcing to sell the family home
so they can take the proceeds of the home and then go their separate ways. As
the number of homes sitting on the market in most areas continue to climb;
however, most couples are finding it difficult if not impossible to sell their
home. When the home does not sell, this has a direct correlation on the cash
flow for the couple. A number of areas are impacted as a result including child
support. Quite surprisingly, this problem is even impacting where divorced
couples are able to live once the divorce becomes final.

As a result of these problems, there has been a significant rise in a trend
known as post-marital cohabitation. While in the past it was practically
unheard of for couples to continue to live together following their divorce,
many people today are finding they have little choice when they are not able to
sell the family home. Quite simply, they cannot afford to live anywhere else
until the family home is sold.

As the average sell time for most homes increases, this means that many
divorced couples may find they must continue to live together for several
months; in some cases a year or more. Older couples who are living on a fixed
income are finding this to be a particular problem as are couples with young
children. In the case of the latter, the only options they can afford are
simply too small for the size of the families.

In situations where couples simply can no longer abide living with another,
they find themselves forced to live elsewhere even if it means moving in with
family members.

Regardless of the situation, couples in such situations find they have limited
options available to them. In situations where the couple is upside down
because the value of their home fell after the housing boom ended, they must
decide whether it is better to remain in the home until the market improves or
try get out with a short sale. Other families are finding themselves facing
foreclosure when they simply are no longer able to make mortgage payments.

The arguments over what to do with the family home have escalated to the point
that in many cases judges are being put in the middle to sort matters out. This
is particularly common in situations where one person wants to remain in the
home until the market improves while the other wants to go ahead and sell the
home even if it means doing so at a loss. In most situations judges are
hesitant to issue orders to sell the home, assuming that the market will
eventually rebound.

Renters are Beginning to be Affected by Depressed Housing Market

In some areas renters are also experiencing problems as a result of the housing
market crash. This has been quite a surprise for many people because they
thought they were immune to the housing crash because they had not taken out a
mortgage. At the time, this seemed to be a safe strategy. Many people assumed
they were doing the safe thing by waiting to purchase a home until the housing
market stabilized.

Many renters in some areas are quickly discovering they are not immune to
housing problems after all. One of the most common problems is the fact that
while renters do not have a mortgage on their property, their landlords do have
a mortgage. If the landlord is not able to make their monthly mortgage payments
due to rising interest rates and adjustable rate mortgages, the rental property
could very well go into foreclosure.

When that happens, renters could find themselves facing eviction. In some
cases, renters have discovered they had only 30 days to leave properties they
had rented for quite some time. This has placed a tremendous amount of stress
of many renters as they struggle to suddenly not only locate a new place to
rent but also to come up with the cash necessary to make rental deposits.

In other cases renters have been affected by rapidly rising rental prices.
Nationally, rental prices have begun to rise. Currently, the worse places to
rent because of rising rental prices are San Francisco and New York. Seattle,
San Jose and Cleveland are also showing signs of rising rental rates. San
Bernardino and San Diego are not far behind, either.

One of the reasons that rents are rising in these locations is the fact that
developers have not been able to construct as many new apartment buildings. In
highly populous areas this has resulted in a large demand with little supply.
When supply is not able to keep up with the demand, the natural result is
rising prices. To make matters worse, rapidly increasing numbers of former
homeowners are either selling their homes as a result of the housing crash or
being forced out of their homes due to foreclosures. They must have someplace
to go and renting is often the only viable option for these individuals and
families, further increasing the demand for rentals.

Overall, the national vacancy rate for rentals has declined more than 10% in
the last four years, clearly indicating that more people are renting properties
today than they were right before the housing boom of 2005. Nationally, rents
have also risen 14% over the same time period, as reported by the Census Bureau.

A number of factors have contributed to the rising rate of rental prices. One
of the most important factors that have contributed to rising rental rates is
the fact that more and more renters are waiting for the prices of homes to drop
before they make the decision to purchase. Many renters are assuming that home
prices have not yet hit the bottom. For these renters, it just simply does not
make sense to buy right now. Quite simply, most renters do not want to find
themselves in the same financial troubles that many homeowners have been
subjected to in the last two years.

There is also the fact that even buyers who would be willing to buy right now
are simply not able to do so because of difficulty in qualify for affordable
mortgages. Following the collapse of the subprime market, many lenders have
tightened restrictions and now requesting not only good credit but excellent
credit. Requirements for larger down payments have also increased, making it
increasingly difficult for first-time home buyers to realize their dreams of
home ownership.

The health of the rental market is being eyed with some concern due to the fact
that the rental market actually has a strong impact on other sectors. The
construction of apartment buildings, for example, is frequently affected by the
health of the rental market.

A Look at the Future of the Housing Market

In some of the worst housing markets in the country, deflation has reached
double-digit proportions. While housing woes have reached around the country,
California appears to be poised to rank among the worse. One of the primary
reasons for this is the fact that in the last several months California has
experienced the largest rate of deflating home prices. In fact, home prices in
California have fallen at levels that have been unprecedented.

Miami, Florida has also proven to be a difficult market at the moment. Here,
the weak mortgage market and record high rates of foreclosures have let to
decreasing home values as well. In fact, Miami has been among the worst home
markets in the country for two years running. The condo boom in Miami just a
few years ago has fueled further problems that have now spiraled into a massive
real estate bust.

While Florida and California may have been easy to predict as being among the
first housing markets to crumble when the real estate market crashed, there are
other markets that are on the precipice of falling which have not been as easy
to predict. One of the primary reasons that Florida and California were poised
to fall so rapidly were rapidly escalating home values during the boom a few
years ago.

Other markets; however, did not rise as much or as quickly, which could be one
reason why they have managed to avoid reaching the top of the list; at least
until now. These markets include Arizona, Nevada, Indiana and Massachusetts. 
Declining home prices as well as high rates of foreclosures in these states are 
also contributing to their worsening real estate market conditions. In Michigan, 
where layoffs have been significant, the economy is playing a strong role.

Problems are expected to grow worse in many markets as several million
adjustable rate mortgages are scheduled to be reset in the coming months. As
these mortgages are reset, it is logical to assume that even more homeowners
will find themselves facing the reality of being unable to pay their monthly
mortgage payments in certain markets. When that happens they will be forced to
either face foreclosure or in some cases make a short sell on their home as
refinancing is becoming less and less of an option for many homeowners.

According to most statistics, the remainder of 2008 is still poised for
problems in the housing market. Many statistics indicate that home values could
continue to drop and new homes could experience a loss of up to 18% before the
year is out. While there are some indications that the market could begin to
level off at the end of 2008 or the beginning of 2009, many experts are quick
to warn that when the market does begin to rebound it will not reach the point
where it left off. In comparison to the housing peak of 2005, the rebounded
market could still be quite a bit lower. Part of the reason for this is that in
many areas, prices escalated so quickly that there is simply no way for prices
to rebound back to that point.

Still, there may be some home for certain areas. In many markets sub-prime
mortgages have either left the market through quick sales or foreclosure. The
stimulus package that is on the horizon is anticipated to help the housing
market in many areas.

First-time home buyers may soon find the relief they have been seeking since
they were forced out of the market; however, it may longer before homeowners
begin to experience that same kind of recovery. This is because most homeowners
are still reluctant to sell and lose the equity they once had in their homes.
The simple fact is that many homeowners have yet to accept the fact that they
can no longer get the same prices for that was possible just a few short years
ago.

Falling Home Prices Have Little Effect on Property Taxes

Many homeowners have been taken by surprise when the value of their home
suddenly seemed to hit freefall. It would certainly seem as though there should
be one advantage to dropping home prices; however. Many homeowners assumed that
when the value of their homes fell, their property taxes would as well. This
has not been the case in many areas; however.

In some cases; homeowners have been shocked to discover that not only have
their property tax bills not decreased, they have actually increased in some
cases. This has been quite a surprise for homeowners as they struggle to
understand why they are paying more in taxes on homes that are not worth as
much as they were just a year ago.

The reason for this relates to the complex manner in which property taxes are
calculated in many areas. One of the biggest problems, especially in Nevada, is
the fact that property tax increases were capped during the housing boom. During
this time home values skyrocketed rapidly. Today, the values of homes in these
same areas are falling; however, the decreases have not actually been enough to
compensate for the increases of just a few years ago. Consequently, the values
of homes would need to decrease sharply over a short period of time in order
for property tax bills to decrease. While declining property values have
certainly been a problem, they simply have not decreased enough in many areas
to provide any relief from property tax bills.

As the rate of defaulted loans and foreclosures continue to soar in many
locations, numerous counties have discovered that the rate of unpaid properties
taxes is also on the rise. The metro Detroit area, in particular, is
experiencing a record high rate of unpaid property taxes. Detroit is currently
considered to be one of the worst housing markets in the United States based on
the decline of housing prices and increase of foreclosures. The lack of jobs and
weak economy in the greater Detroit area are considered to be the primary
factors contributing to the housing crash in the area.

Even if property owners are paying their monthly mortgage payments on time they
could still be at risk for losing their properties through foreclosure if they
fail to pay their property taxes for three years in a row. In such situations,
the county would then take control of the home and auction it off to pay the
balance of taxes owed. Counties in the Detroit area are currently struggling to
recoup hundreds of millions of dollars in unpaid property taxes. The issue has
had significant repercussions on counties in the greater Detroit area.

Property owners who find they are behind on the property taxes can take some
steps to stave off foreclosure. The first step is to begin making payments on
their taxes. Many homeowners make the mistake of thinking they are doomed if
they cannot pay off all of the taxes owed and thus pay nothing at all. Keep in
mind that making any payment, even if you cannot pay all of the taxes, is
better than paying nothing at all. If you are not able to pay all of the taxes;
at least try to pay off your oldest taxes first. Remember that taxes which
remain unpaid for three years consecutively places you at risk for foreclosure.
Pay off the oldest taxes first to combat this risk.

You might also check with your county to determine whether you may be eligible
for an extension for property taxes which are unpaid. In some situations, the
county treasurer may be able to grant you an exemption for your taxes if you
are able to demonstrate extreme hardship. It is best to do this as early as
possible; however, as there are commonly deadlines for the exemption
applications.

In addition, check with your mortgage company or bank to find out whether they
offer any type of program or loan that can provide you with the money needed to
cover your taxes. It is never in the best interest of the bank to have the
county take over the property, so they are often willing to work with the
homeowner to avoid having this happen. Keep in mind; however, that when you do
this will you will be taking on an increased debt burden.

Tips for Real Estate Agents to Survive the Current Market

Like homeowners, real estate agents are suffering as well. Inventories have
continued to rise and as a result many agents are not closing as many
transactions as they have in the past. In order to remain competitive, many
agents have discovered that they must become quite creative in order to keep
their offices open.

As budgets tighten, advertising dollars have become limited and yet agents know
they must advertise in order to get beyond the current slump. While print and
television advertising can be quite expensive, advertising online remains quite
cost effective. In fact, many agents are turning toward blogs in order to offer
weekly market advice that is specific to their location. This technique is
quite inexpensive and works well to keep local residents apprised of the
existing market conditions.

Agents are also recognizing that buyers as well as sellers are more interested
in value today than ever before. As the average home price continues to drop,
an increasing number of sellers are turning toward the idea of selling their
home on their own in order to avoid real estate commissions. To combat this
problem, more and more offices are reducing their fees. Other creative efforts
can also be quite effective. For example, some agents are springing for the
cost to have properties professionally staged or even professionally cleaned.

The current market is definitely challenging; however, it is critical that you
take action rather than simply sitting around bemoaning the fact. While making
an effort in the existing market will take some effort, it will also set you
apart from the competition. One of the ways you can go about doing this is to
consider each property separately and think about what you can do to make that
property stand out. In battling the current real estate market, you may simply
find that you need to fight it out one property at a time. You do not need to
spend a lot of money on these efforts; however, there are many things you can
do to market your listings in order to increase their exposure.

Consider how much online exposure your listings are currently given. If you do
not have much of an online presence at the moment now could be the time to make
that change. Statistics indicate that more than 83% of all buyers begin their
property search online. If you are going to nab those buyers, you need to be
advertising in the same medium in which they are searching or you run the risk
of missing out on them.

In addition, it is a good idea to think about what you can do to improve the
quality of your advertising. For example, you might give some thought tow hat
you can do to improve the quality of your photographs.

Finally, use the time you have on your hands to your advantage. It very well
could be that business is out there, you simply need to do some mining to find
it. Use the power of your database to unearth warm leads which could provide
you with excellent resources for buyers. Set a goal to contact at least 10
people ach week. You just never know where those phone calls may lead you,
especially if you provided them with great customer service in the past.





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