The Real Estate Bubble

US-foreclosureHow Far Did It Burst and What Can You Expect?

2008 was a bad year when you are talking about finance in the United States, and four years later things really haven’t started improving as of yet.

With a recession that was artificially terminated, economic growth that continues to be artificially stimulated, and mortgage lenders still on the hook for sub prime mortgages that they probably shouldn’t have been handing out, what was a local crisis in the United States is starting to spill over to the rest of the world in a global residential real estate market crisis.

Foreclosure rates are still way up, people who are earning less than they were 5 years ago cannot pay their bills, and the real estate bubble has clearly burst on a global scale. What does this mean for you? Are there things which you can take advantage of in this market? And are there ways you can protect yourself?

What Does the Bubble Bursting Mean For You?

Unless you are in a very high demand real estate area such as the Silicon Valley in California, you can expect your real estate prices to be at least 20% lower than when you initially purchased your home assuming you purchased the property within the last decade. For consumers it is even worse than that – in some markets, a $182,000 home is currently worth $125,000, or a reduction of almost 33%. For many home owners, this means that their home is now “under water,” or they have a mortgage that is worth more than their home.

This means a couple important things in the global residential real estate market: 1) you’re stuck in that home unless you want to take a substantial financial hit; and 2) you won’t be able to refinance your entire mortgage if you need to be able to do so to save money or consolidate debt. This means many home owners are simply trying to ride out the tide and keep fighting until their local area experiences a recovery.

Are There Things of Which You Can Take Advantage Now That the Bubble Has Burst?

If you have the capability to purchase real estate, now is the perfect time to invest. When there is a lot of fear in a market such as there is in the global residential real estate market right now, you have the ability to put your money into something that has a huge potential of growth with very little risk.

People are looking to get out of their real estate left and right because they are afraid that they will not be able to get their investment back or they’re just not able to make the payments they need to make on the home and are looking to sell instead of lose the home. With the right resources, this could very well be the time when you could make your fortune!

You can also take advantage of the historically low interest rates that are happening around the world right now. This is part of the artificial inflation of the global residential real estate market and economies in general – with lower interest rates, the theory is that people will be more inclined to spend money and boost the economy through consumerism. With the ability to get a long term interest rate under 4% in many areas, you can buy more property with the same amount of money, and that’s huge for many investors.

What Can I Do to Protect Myself As a Property Owner?

If you are a property owner who has become a victim of the global residential real estate market bursting or you are just waiting for it to hit your country, there are a couple things you can do now to help protect yourself later:

Refinance now before your property loses value. With interest rates around the world historically low, if you have not had your home valuation affected, now is the time to take advantage of a better interest rate. If your credit is less than great you should be able to lose a percentage or two on your mortgage.

Sell now before it’s too late. If you think you might be moving in the near future and your home is still positive to your mortgage instead of being underwater, then consider selling now and going to rental properties until you have the opportunity to buy. You might find valuations lower when you’re ready to buy again, and you could get more house long term than staying and losing money on a short sale.

Add upgrades to your home. When you add upgrades to your home, you add valuation, and that’s what people need in terms of home value to mortgage.

You don’t have to be a victim in the spreading global residential real estate market bubble bursting crisis. With some proactive steps and a few resources, this could be the best time in your life when it comes to financial investments – check out what you can do today in your area!