Waiting out the storm of foreclosures
A lot of Americans are afraid to buy homes right now. It's no wonder that people are skittish about jumping from renter to owner when you think about the constant barrage of "housing crisis" headlines. Clark wants to offer some "tools of trade" so you have a better feel for when you should venture into the marketplace.
First off, the foreclosure rate (through March 2008) is up about 60% over a year ago. The numbers got ugly during August of last year and peaked in March. 700,000 people were put out on the street during that month alone.
Right now people are even frightened to touch foreclosures -- along with "people problem" houses. But that's a mistake. If you can buy well below fair market value, that will protect you on the downside.
Looking for a sign for some guidance? Wait until the rate of foreclosures declines for 4 consecutive months. It's going to be like waiting out a fever that has peaks and valleys. You want to see that fever has broken substantially before you buy. Clark will let you know on the air when that happens.
They say all real estate local, but there are some unprecedented national trends that helped foster the housing slump. First, there was the idiotic lending that created more of a demand for housing than is natural. Second, the Federal Reserve had artificially low interest rates that created further demand. (Yes, Alan Greenspan is a human being, not a god!) Finally, there were bubble markets in the spec states of Florida, California, Arizona and Nevada.
The bottom line is that even though the cycle is still playing out, there's already opportunity out there for you.
One final note: Loan underwriters Fannie Mae and Freddie Mac have set up penalty systems for those who mail back the keys and walk away from a foreclosure. Fannie Mae will penalize you for 5 years, Freddie Mac for 7 years. With Fannie, however, you may get out of the penalty box after 36 months if you have certain extenuating circumstances.
So just because you go into foreclosure, it does not mean you'll never be able to buy a house again.
