Posts Tagged housing market
Double Dip Recession? Will it Happen?
Posted by Top Home Loans in Economy, Investing on September 2, 2010
Fear is the greatest way to manipulate mass groups of people, and the government has the ability to manipulate the public. The government can change consumer confidence, and they can promote growth or recession within the country. Unemployment, as a lagging indicator, has been on its way down signaling that a recovery has been proceeding in the recent months. Also, all key indicators have been positive. Not always as positive as they have been expected to be, but they have always been positive. There is great hope in the markets that we are on the economic road to recovery.
There are also negative aspects that must be considered. Some goods and services, including Canadian housing prices, have been overpriced, and these goods must fall in line before the recovery can proceed full. The amount of positive aspects greatly outweigh the negative aspects, so it is likely that we will see some volatility over the next several months, but a market crash is not something that is expected.
Will the Housing Market still experience a Pullback?
Even if the market and the economy does not experience a double dip, then can micro economies still pullback? The answer is yes; unfortunately, it looks like the pullback in the housing market is a definite reaction to what has been happening recently in the housing market. The only way for the market to resist a pullback is by keeping low interest rates, but mortgage rates have been low for such a long time that it is highly unlikely that these rates will be able to remain at this level.
If the Bank of Canada did keep mortgage interest rates at these lower levels, then it can only cause a repeat of the recession that we have already seen. The best remedy for the overpriced market is to allow for the prices to fall back in line and to keep growth steady. The goal of the market is to allow for consistent slow growth, and with too much volatility, this can cause major damage to investors and the market as a whole.
Do you think that there will be a double dip recession? When do you think that the stock market will decline again? Leave your response in the comments below.
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Mortgage Rates on the Slide along with Property Values
Posted by Top Home Loans in Economy, Mortgage Advice on August 17, 2010
For the first time rates and property values are not correlated. Instead of property values increasing as the mortgage rates decline, property values have been decreasing as well. Why is this? Borrowers are extended to their limit, and they do not have any savings, and they have borrowed as much money as possible. The mortgage rates are going down; however, more people are not buying. There is no one left to buy because everyone who can be approved has already been approved. Less younger people are able to get a job, nor would they want to buy a house.
Also, as the baby boomers begin to pass away, more and more houses will become vacant. This means that there will be a great increase in the supply of housing, while demand for that housing will remain constant or continue to decrease. The future of housing, for the first time in awhile, looks relatively bleak. People do need to have a place to live in, so they will continue to purchase up properties, and immigration will support the economy as well.
When will the Mortgage and Housing Market turn around?
The market goes up and down, and the same can be said for the mortgage and the housing market. There is a point when house prices will return back in line and demand will come back to the market. What price is that is yet to be determined. Also, as incomes increase, this will allow people to pay more for properties. At some point these two numbers will intersect and demand will return to the market. Most likely, the market will not boom for several years; however, the mortgage and housing market will remain stagnant. Once houses and mortgages get too cheap, then demand will return and the government will allow home buyers to continue to purchase property and they will be able to be approved for their mortgage.
Housing comes in peaks and valleys. If you are planning on buying to live in for the long-term, then you shouldn’t worry about it. However, if you are planning on buying to invest, then this may not be the right time for you.
What do you think the housing market will do over the next few years? Do you plan on buying a house? Leave your response in the comments below.
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Does Real Estate always go up?
Posted by Top Home Loans in Economy, Mortgage Advice on August 11, 2010
Over the last 20 years, real estate has been one of the best investments that someone could make. It has become traditional wisdom that real estate prices will continue to go up without very much risk; however, can real estate prices go up forever?
The return on investment, in recent years, has been as high as 10% annually. Prices have followed this trend, yet income levels have not. Our incomes have be subsidized by cheap lending and plenty of availability. The levels people are in debt continue to rise dramatically as the price of houses increase. The only thing that can correct the market is if wages increase dramatically, not likely, or if property values fall back in line with the market.
People still buy based on the idea that they are purchasing an investment that cannot go down in value, yet this is a serious flaw in our thinking. The truth is that it is a more risky investment than most. For example, in the stock market, you can sell and buy when you want. If you see a collapse in the stock market, then you can sell the same day. If you see a collapse in the housing market, then it will be unlikely that you will be able to sell your property. You may end up holding the property for far longer than you expect.
Also, real estate investing is leveraged, usually many times more than what you put down originally. This means that when a market moves up or down, then this can cause your return on investment to fluctuate greatly. If the market drops any significant amount, then you could end up a great loser. If your buying to live in a house, then this is much less important.
Buying real estate is a risk; however, there are many awards associated with it. We all need a place to live. When making the decision to purchase a property, make sure that you take the time to discuss and review your options before proceeding. You wouldn’t want to buy something you can’t afford.
Do you see the house market going down? What things did you consider when buying a house? Leave your response in the comments below.