Forecasts for the Housing Market looking Grim: How will this affect YOU as an Existing Homeowner?
Whether you are a buyer or an existing homeowner, this article applies to your situation. The logic of the housing prices direction only going up because of the current historical lows in today’s market is simply not sound. In fact, numerous experts in the field are predicting home prices to decline until a hopeful shift in 2014-2015. How will this affect you as a struggling homeowner?
I am skeptical by nature and I do not believe in anything unless there exists substantial supporting evidence. At the end of the year 2010, I read and watched Peter Schiff discuss the housing market. Peter is the president of Euro Pacific Capital and the author of “How an economy grows and why it crashes.” Despite his outstanding critics, he predicted the housing market’s downfall long before the sharp decline in 2008 and his article posted in December 30, 2010 on wall street journal was #1 at the time.
I am not advocating that Peter Schiff is correct in all his thoughts but his beliefs cannot be devoid of merit as he has been accurate in many of his theories such as an exponential increase in the price of gold and of course the housing slump that we are in today. His bold statement about the housing market was that, “they would have to decline another 20% just to get back to the historical trend line.” Schiff says prices will have to fall as they are still much too high for a market where there is a shortage of demand and an excess of supply. Why won’t demand increase? Inflation and the down economy (less jobs, utility costs are increasing, maintenance, taxes and etc.). He says, “Real estate prices will not keep pace with inflation.” Although Schiff is known to make audacious statements, he has been accurate in his assumptions and many experts beliefs are now parallel with his projections that the worst is yet to come and recovery may happen much later than previously expected.
So how does this affect you as a homeowner? It’s very simple. If you know you will be struggling to keep up with your mortgage payments, then making a decision for your home should be made in a timely manner because if the market value of your home decreases, the difficulty of selling your home via short sale will increase. Even if your property is foreclosed on (unless you are in an anti-deficiency state and have only 1 lien holder), your deficiency amount may be increasing as they may still pursue you for the difference between the auction price and the amount owed.
The housing market will get better eventually. However, will you be able to survive until it does? I believe it is optimal and a much safer option to rent until house prices hit rock bottom which is projected to be around 2014. If you short sale, you will be able to purchase another home later at prices that are unheard of. Buyers, currently the interests rates are excellent but unless you are absolutely certain that you’re able to afford purchasing a new home with enough savings in the bank and are looking long term, continue to rent. This is my honest opinion.
Be proactive and call us. My team of agents are #1 in short sale negotiations for Washington state and we are happy to provide you with guidance and free advice on what is in your best interest for your home.