Sub Prime Loans Hurt The Industry

[SEOWolf]

Well I have this tremendous urge to say “I told you so”.

I have stated for some time on several Forum and Blog post that the trend of Sub Prime loans would eventually catch up to us and have an adverse effect on the real estate industry.

My only surprise is that it took so long.

It was inevitable that home buyers would be in distress over purchases that were well beyond their financial means. Especially when they bought their homes at all time highs. Many home buyers are feeling the sting as these Negative ARMS mature. They find themselves owing too much on a home that has seen downward pricing as the market continues to be in an adjustment phase.

To top it off, human nature tends to make us all spend more when we have more so even those of us that used the equity in our homes to pay off credit cards and such have only gone out and incurred new credit card debit.

Sadly, the results for our industry are fewer home sales and higher foreclosure rates.

~VegasMack

Mack - you are correct about human nature - probably the biggest reason why the subprime market took a nose dive. I feel the same way as you do that the greed would eventually cause it to crumble around itself.

[Missouri Real Estate Pro]

You guys are absolutely right! I've been following this all over the country but particularly in the Vegas market. It seems that recently I have seen examples of having major problems with this.

I actually know of a guy who purchased his home using a sub prime loan and thinking of the short term benefits instead of the outrageous price he was paying. Now he’s in over his head and looking to relocate.

People should really read the small print. There has to be a way for people who aren’t in the industry to educate themselves about the diff’t types of loans out there, because lets face it, I don’t think anyone is really going out of their way to tell people what they’re getting themselves into.

It’s not only a sense of principle, but just look what kind of negative repercussions the market is having due to these loans; that not too long ago were being praised as the best thing since maple syrup.

[San Diego Real Estate]

Well guys I couldn't agree more....

I'm curious do you think that our Goverment will step in to try and solve the problem?

[waynelong]

The sub prime has killed us in our area. We have a lender next door who concentrated in the sub-prime market. They have let 90% of their people go.

Nothing can be done people hurt in the process - is there? Federal reserves have been floated to keep the industry afloat, but what will really happen? Sell to Fannie Mae?

[SEOWolf]

Originally Posted by autumnwinds

Nothing can be done people hurt in the process - is there? Federal reserves have been floated to keep the industry afloat, but what will really happen? Sell to Fannie Mae?

I’m not sure autumnwinds. I really don’t think there is a quick fix on this situation.

I know that President Bush has proposed legislation to help distressed home buyers refinance their homes and now Congress is discussing a bailout.

I still don’t think a Federal bailout is appropriate. The problem is actually much smaller that the media would lead us all to believe according to the actual figures. My wife’s real estate blog makes some great points about the liberal press making this more of a problem than it really is by shaking consumer confidence in the housing market unduly.

~VegasMack

[waynelong]

That is a good post on the blog. The perception created by the media is what is shaking the industry. There is a real problem with the sub-prime mortgage industry but it will correct itself shortly. The important thing is improving consumer confidence. Real Estate is "real" property that they can live in while they wait for the next up cycle.

[vinnieg24]

so the real estate market is at a bad place right now...is it a buyer or a sellers market right now, im assuming a buyers. if im going to buy a house should i look soon? i was taking my time. but if prices are low then im assuming i should take advantage of it

[magma]

Well its Really helpful thank you for sharing all these things With us..