Real Estate Articles

A recent statement released by RealtyTrac, Inc. indicated that US home foreclosures have jumped by 90% in January 2008 when compared to the same time period from the prior year.

Much of the blame has been placed on the rising interest rates on Adjustable Rate Mortgages (ARMs). Homeowners who financed their home on an ARM with a low rate are finding it harder and harder to make their monthly payments. And the higher interest rates go the more borrowers will default on their loans. Many are finding it more advantageous to simply walk away from the home, let the bank foreclose, and start with a clean slate.

The market is now caught up in a downward spiral where home prices are dropping while interest rates are rising. Homeowners who put little money down are finding themselves in upside down mortgages in which they owe more than the house is worse. And it’s not just lower income areas that have been hit hard. Many of the popular McMansions that have been popping up all over the place are finding their way to the foreclosure market too.

Obviously a flood of newly foreclosed homes hitting the market will only drive prices even lower. We could be looking at a full blown housing crisis.

Of course one person’s crisis is another’s opportunity. Lower sale prices combined with the skyrocketing number of US home foreclosures are music to a savvy investor’s ears. If you’ve been thinking of jumping into the foreclosure investment game, there may never be a better chance than right now.

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