Home Foreclosures

With a slowing real estate market and the increasingly high mortgage rates over the past couple of years, it’s definitely no secret that the foreclosure market is at an all time high. There have been many factors that have led to the recent real estate drop, which include higher interest rates, high real estate taxes, and a dragging economy. Of course each area of the country is different when considering prices and purchase value, but overall, a cooling market is the result of many factors and not only the three that have been pointed out.

One of the most talked about contributions when mentioning the cooling real estate market is the rise of mortgage interest rates. The 30-year mortgage rate is always something to consider in home buying. With the interest rate rising to 6 ½ %, homebuyers seem to take this into consideration and will wait until it lowers to make a new purchase. Recently, foreclosures are predicted to increase with this Fall’s reset of adjustable-rate mortgages. The millions of Americans that took out ARMs (adjustable-rate mortgages) will see their monthly mortgage payments spike up to a 20% increase that could cause home foreclosures to spring up from all income groups.

Real estate taxes are one of the most important factors when considering buying a home. When the prices of the homes escalate, so do the real estate taxes. People have found that when they purchase a new home, that they will be hit with much higher real estate taxes based on the purchase price of the new home. This has led to an increase in home foreclosures due to the fact that the new homeowners find themselves in a bind paying a higher mortgage and higher real estate taxes at the same time.

The economy always has an effect on how we buy and sell anything in this country. An inflated economy as we are dealing with right now has a huge effect on home buying. As prices rise on our everyday purchases, prices also rise on real estate. No one wants to purchase something and sell it for less than what its worth. This is why the economy has had an effect on the real estate industry. As home prices increase, buyers begin to decrease and everyone seems to play the ‘wait’ mentality. The rise of home foreclosures turns out to be the result of too many homeowners stuck in a house they can no longer afford or even sell.