In the past few years, foreclosures rates have been extremely high, although they have dropped within the past year. While some aspects of the housing market have suffered due to all the bank foreclosures, the availability of cheap homes has provided a big incentive for buyers to get involved in the real estate market. Although the rate of foreclosures has slowed a bit in the past year, real estate and banking experts warn that there may be a foreclosure tsunami on the horizon right now. Why could we be seeing more foreclosures and what does that mean for the housing market in the future?
Top Reasons for a New Wave of Bank Foreclosures
There are several different reasons that we may soon be seeing a new wave of bank foreclosures. One reason is the huge settlement banks will be paying for foreclosure abuses. During negotiations, lenders have slowed down the foreclosure rates, but the foreclosure proceedings are likely to pick up once again now that an agreement has been reached with lenders.
The other reason that a tsunami of foreclosures may be on the horizon is because of the many delinquent home loans out there. Some of these delinquent loans haven’t gone into foreclosure proceedings yet, but they soon will be foreclosed upon as banks work to cut their losses and move on. Some experts are saying that as many as six million mortgages are delinquent and on their way to repossession, which is sure to become extremely noticeable when those foreclosures go through.
What More Foreclosures Mean for the Housing Market
So, if we do see a huge increase in bank foreclosures, what does this mean for the housing market? While it may seem that these foreclosures will lead to huge dips in the housing market, which could cause another recession to take place, many experts believe that the opposite will actually occur. Although mortgages aren’t easy to acquire, credit is less expensive and home prices are low, which is causing many buyers to start getting involved in the real estate market today. The influx of new foreclosures may cause some problems in the real estate market, but it could also bring about some real benefits as well.
As more bank foreclosures flood the market, the cheap homes available will definitely offer benefits for investors who want to acquire rental properties and homebuyers looking for good bargains. For investors, some mortgage companies are offering new programs that allow investors to purchase foreclosures in bulk if they will be using them as rental properties. The main goal is to make sure there are plenty of rental homes available for those who aren’t able to buy a home at this point in time. Investors can find great deals right now and since rentals are in high demand, investors can really make quite a bit of money.
Homebuyers who are looking for cheap homes can also benefit if the real estate market sees a huge tsunami of bank foreclosures. As the market is flooded with more homes, prices will be cheap, making it possible for homebuyers to find great bargains. For those who have been waiting for low prices to buy a home, this will be the perfect time to make a purchase.