What Happened in 2008 With Real Estate
Posted by admin
At the time the housing market was stable. In reality the housing market was experiencing a high that hadn’t been seen in quite a long time. Beyond the fact that many house buyers were taking on huge amounts of debt there also existed another problem. Because of the health of the property market at the time, in several cases there were expectations relating to future growth that in retrospection now seem to have been unrealistic. The last 2 years of the real estate boom happened in 2005 and 2006. In that period of time lenders did not hesitate in the least to lend cash to borrowers with no regard for their credit profile. These loans represented a tremendous profit making opportunity for banks. Issues truly began to occur ; however , when IRs started to rise from their previous lows. Traditionally, rising interest rates have always had a detrimental effect on the Abilene Real Estate market. When rates are low they help to supply demand ; however , when they’re high they finally cause prices to fall. Till mid-2006 home builders couldn’t build new houses fast enough to meet the increasing demand. During mid-year ; nonetheless the demand began to slow. It was also about this time that the rate of defaults on loans began to increase. Before long many lenders began to find it hard to obtain money from their prior investment sources. As a result, wannabe buyers discovered that loans were no longer as easy to get thanks to the fact that money was no longer as widely available. In addition, financiers suddenly became cautious about taking on risk and underwriting axioms grew tougher. House owners who had taken out loans with adjustable rates began to find it difficult to meet their home loan payments as interest rates kept on rising. More tough underwriting guidelines meant they were not able to refinance to fixed rate mortgages in a few cases. As a result, defaults continued to rise ; fueling the big rash of foreclosures. www.abilenerealestategroup.com