Real Estate Boom: Investment Decisions Made Tough by Foreclosures

The economic scenario of the property market in 2009 provided a pretty cloudy image due to lowering prices, rising sales figures and an alarming degree of foreclosures. In fact for the ones opting for house buying in the months of summer this is a sad scenario. The confusing situation of falling prices and rising sales in one hand and hyped foreclosure situation coupled with major unemployment conditions have made it all the more difficult for the investors and buyers and sellers to indulge in property transactions.

Escondido, San Marcos, Vista, Oceanside (Highway 78) and Southwest Riverside County have featured as the most potent areas in terms of selling of houses with lowest prices which is almost near to recovery limits and this has greatly affected the aspect of selling and buying of houses in these regions.

Going by the records one can understand that in the Escondido locality alone 157 houses were put up for sale for approx as low price as $200,000. It can be estimated that these houses will be almost 70% below the earlier sales prices. During the last session of recession in the world of real estate in the year 1996, the median price was quoted to 3.9 times the median income of a normal household and hence the usual trend of mortgage turned out to be approx 31% of the defaulter’s income.

The present recessionary scenario has pushed down the mortgage price to approx 30% of the income depending on the median prices which is apparently 5 times of the median income. For most buyers it’s a frustrating situation as firstly they find it difficult to adhere to the higher side of the prices and secondly they find the lower portion of the pricing quite irritating.

The real estate agents find it difficult to handle at least 25 investors interested in one house at a time. According to Gene Wunderlich who operates as a property agent in Wildomar, “People are afraid things are heading back up, and if they don\’t jump now, they’re going to get frozen out”. Moreover going by Wunderlich’s records one can see that the prices on a per-sq-ft basis have reached an average limit during the past few months in the localities of Temecula and Murrieta. Norris, unlike Wunderlich fails to comprehend any amount of steadiness in the range of prices for houses and he also concludes that, “There’s no doubt that it’s going to decline,” he said. Combine the huge “shadow inventory” of foreclosures and rising unemployment, and “you have a perfect storm.”

On the whole it can be concluded to be a comparatively ripe time to invest as the interest rates will shuttle mostly between 5 to 7 %, but as a precaution people should assess all the possibilities prior to investing.

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