The Effect of the Credit Crunch on the Real Estate Market

By shaye • August 30th, 2010

A lot of sectors have been affected by the global financial crisis. Many filed for bankruptcy to save what assets they have left. Many lost their jobs and more lost their homes. Many industries have been hurt. And one of them is the real estate market. The industry has experienced a significant decline in home purchases. It has also witnessed the rise of families losing their homes to foreclosure.

Many players in the industry have been affected as well. Many projects seized to operate because of the credit crunch. This affected the firms who have lent the investors. This has led them to change their terms, thus losing their foreseen gain from the transaction. Most are also obliged to lower their interest rates to stay afloat in the industry.

This has affected the purchasing behavior of many consumers as well. As mentioned earlier, fewer people are going out there to purchase a home. This is because people are holding on

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to their money. They are saving it for the worst. It is because of this that the real estate market is struggling even more.

No one can blame people if they choose to spend less. This is because of the rough times. Many are losing their jobs due to the chain reaction of the financial ordeal. With all things people have to worry, purchasing a home would be the last thing on their mind.

Are there opportunities?

Definitely, although there are a lot of sad effects brought by the crisis, it also opened opportunities. Many lost their homes to foreclosure, thus, they are looking for homes to rent. Rental properties have become a sensible investment for most entrepreneurs. Those who have reserved wealth are taking advantage of the inexpensive values of the various houses.

Aside from cheap homes, there are also wholesale properties that they can take advantage of. Although they will spend additional cost for renovations and repairs, the demand for a property to rent will ensure them of a return of investment. This will not only help them, it will also help stimulate the market a bit and it will surely help many tenants who are looking for a home.

Aside from having it rented, they can resell the property at a better price. Now is a great opportunity to purchase homes. Although there is a decline in home purchases, there are still people who are willing to purchase a home especially now that the prices and the interest rates are low.

Other benefits for home buyers:

The government is encouraging people to purchase homes because they are aware that this would help the economy a lot. To encourage more people to buy a property, they are implementing programs such as tax credits. This arrangement will definitely encourage first time home buyers to purchase a house.

The credit crunch has definitely caused a lot of challenges. However, there is no reason to lose hope because it did not fully close its doors. There are opportunities that all of us can benefit from.

See Phoenix AZ Houses for Sale, you will surely find your dream home from the Real Estate for Sale in Phoenix AZ.

 

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