For many prudent people, an obvious bit of their financial planning is hoarding money for certain events. The first is to simply have a ?rainy day? fund for those times when life jumps up and bites you in an expensive way. For most, it is also all about saving your beans for when you retire. While these are the two standards, you might want to include a third reason on your list and start hoarding even more money.
2007 is going to be an interesting year in the real estate market. Most feel it will be one of those years where we will see a market that is essentially flat. Some markets around the country will see slight appreciation gains while others will see slight depreciation rates. Given this prediction, why would I be suggesting there are going to be a lot of opportunities in the real estate market? Three words explain it all ? mortgage loan defaults.
To call the recent sellers? real estate market hot is a bit of an understatement. It wasn't hot, it was torrid. We are talking surface of the sun kind of hot. This put purchasers in a bad position during this period. Simply put, they had to pursue ?interesting and unique? financing to afford the purchase of a new home. Many of these buyers are going to be regretting their choice in 2007.
The recent hot real estate market was supported by buyers using hybrid and balloon loans for financing. With historically low interest rates and massive annual appreciation rates, it seemed like a no brainer for buyers. The problem, of course, is things change. Interest rates have gone up and should continue to do so. Appreciation is now flat, if not regressing. In practical terms, this means the buyers now are seeing increased monthly payments on a home in which they have either reduce or no equity.
This represents a disaster and the foreclosure market is starting to heat up as we speak. In 2007, the bill is going to come due for many hybrid loans and buyers will be between a rock and hard place when trying to deal with the new reality. This represents opportunity for those that are liquid at this time.
Simply put, hoard your money and start looking for steals. By the summer of 2007, your only difficulty will be figuring out which one to pick from a very large selection. Since the market should turn around in 2008, it is an opportunity to make a nice tidy profit. If you doubt this scenario, just start watching the paper as prices start dropping.
