For the past three years, the American housing market has been a buyers’ market. This means that the current dominate business model within the real estate market favors buyers more than sellers. Increase in supply and limited funds for mortgage loans are the two primary factors affecting the ongoing real estate business model. Increase in supply refers to the abundant number of real property available on the market. And limited funds for mortgage loans reference the net available liquid assets available to backup mortgage securities.
But the American economy is a robust creature, capable of adopting itself to the harshest market conditions. This translates into a limited window of opportunity for potential buyers to purchase their dream home. Following the Savings and Loans Crisis of 1989, the American housing market crashed driving the whole economy into a recession. By 1994, American housing market recovered all its losses as demand increased forcing a steady inflation of home prices due to diminished supply. Similar circumstances existed in 2001-02 which created the real estate bubble during the past decade.
In both events, home prices were at historic lows and funding supply was limited. Buyers must be aware because home prices spike reaching new highs following periods of over supplied market and tight funding. Already, economic indicators are favoring a speedy recovery within the US housing market for a number of reasons. First, United States housing market is still considered the prime of all investments in comparison with European and Asian markets. Second, United States enjoys a diversified economy that encompasses manufacturing, agriculture and service components in addition to the highest yearly output of new patents among the world leading economies. Third, Euro, the unified currency of European Union, is losing ground against the US dollar due to rising debt among members of European Union. Possible default by Greece, member of European Union and Euro user, sent shock waves throughout the investment world leading investors to flood US markets. Such action will bring much needed liquidity back to the US economy, which will allow banks to offer more competitive loans in search of profits.
Fourth, Federal Reserve has not raised interest rates yet. This means that consumers and banks can borrow funds for smaller fees. In emerging economies, such as Brazil and India, similar policies led to rapid inflation forcing their central banks to increase interest rates. Moreover, as employers have been adding jobs, more individuals are becoming eligible to purchase real properties for amazing prices. This dynamic of events, both political and economical, manifested itself along a path leading to limited availability of real property and higher interest rates, which will drive up the cost to acquire any real property.
In closing, wise real property seekers must take full advantage of the current US real estate market. Sellers, whither traditional real property sellers or foreclosure title holders, are willing to negotiate prices. In addition, if a buyer enjoys solid credit ratings and history, that buyer can negotiate better financing terms with lenders than previously possible. This limited window of opportunity is going to contract following the end of summer 2011. Finally, JohnHart agents are qualified professionally and academically to help you identify the best real property to suit your needs. As summer days dwindle, contact JohnHart to start exploring the different real estate solutions available to you.
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