With the economy in a deep recession and the stock market in free fall, real estate trends are also a good indicator of where the economy is at. Homeowners are seeing their home values decline and a record number of foreclosures is crippling the marketplace and leading to a housing glut. Real estate trends such as these indicate that we are indeed on shaky economic ground, but there is some opportunity for some people who are following these trends closely.
The recession has brought on a decline in new home starts, which has adversely affected the construction industry. Real estate trends point to this and the fact that contractors who are building homes are building them smaller means that the days of McMansions are gone and more practical housing is being built.
Real estate trends tend to be good indicators of the overall economy. The decline in new housing starts has negatively impacted the construction industry and in turn their suppliers and contractors. Many suppliers have had to lower their costs for materials, which eats into their profit margins. Construction companies that were starting new homes have been faced with having to stop construction altogether.
One of the most disturbing real estate trends is the alarming rate of foreclosures. This is creating a glut of available housing as many banks are left holding the title to these homes and are looking to unload the home, often at a price far below what the mortgage was originally for. Banks are taking losses on these foreclosed homes, while bargain hunters are snatching them up because of their affordability.
Real estate trends across the country keep showing a slow down in home sales as well. This is not a great time to have a home on the market because prices have bottomed out. With record layoffs, less people are looking to buy a new home and are staying put or downsizing to rentals. Those that are looking to purchase a home are looking at hurdles in terms of financing. They can expect to put down a much larger down payment than what was required, and their credit scores have to be high.
When reading into these real estate trends, it’s hard to see where there will be a turnaround and prices will become more stable. Everyone is waiting for the stimulus package to kick in and the spring market may be telling as to how long these real estate trends will continue.
