On the Flip Side
The Pros and Cons of Flipping Houses
"Is it sink or swim time in the real estate world? Or is there hope of a lifeline in the middle of these stormy economic waters?"
There's hardly anywhere in the country that hasn't felt the effect of the housing markets softening, and nowhere has experienced more ups and downs in the past few years than California. Though millions of sellers may have popped the cork when they sold their west coast pads for record profits, those left holding the notes may now feel like they're suffering from a bit of a housing hangover.
January, 2008 marked the first month when foreclosure sales exceeded the number of existing homes sold statewide. A combination of an active frenzy of home-buying, combined with banks being all too willing to take a crap shoot on high-risk loans, has found plenty of folks in over their heads. Is it sink or swim time in the real estate world? Or is there hope of a lifeline in the middle of these stormy economic waters?
For those who may have committed to an adjustable rate mortgage and are now fighting to make ends meet, there are some silver linings peeking out from behind those dark clouds. Since many banks would much rather renegotiate your loan than have to take on yet another foreclosure, now is the time to bargain for a better rate. With fixed rates as low as five percent, you may be able to cut a big chunk out of that monthly payment, just by rolling that old loan into a new one.
If you're one of the daring investors who has been looking for the right time to buy into the market, things may be looking up. With financial institutions dumping foreclosures left and right, it's a buyer's market. Always make sure and do your homework, though; just because a house is available at auction doesn't mean it's a steal.
Been fantasizing about your dream home? Median prices on the Pacific coast have dropped as much as 22 percent in recent months, with considerable declines in many other major urban areas too. If you've been saving your pennies, now may be the right time to talk to a Realtor about getting into a new home - or even a second home - while prices are soft.
Finally, there is some hopeful news for some communities where there wasn't as much of a bubble to burst. As prices drop in major markets, it brings those slower-growing local economies more in line with everything else. Also, as people gravitate away from the big-ticket homes, those communities who still have plenty of affordable housing may realize a pleasant influx of buyers, eager to make their dollars stretch.
The key word for both buyers and sellers is "patience." Always know what you can afford, and do your homework before making one of the biggest financial decisions of your life. As the old saying goes, this too shall pass; make sure you're driving your own bus, rather than struggling to keep out from under it.
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