Investors Flee From Slowing Market
(Just about everyone is becoming increasingly skeptical over the real estate market, whether they own property or not. )
Now, investors and regular home owners alike are feeling the burn of a cooling market.
Just as home owners across the nation are trying to get rid of their abodes, investors are also trying to rid themselves of the property they once tried to make a profit with.
An August 9, 2006 article by AOL Real Estate Columnist, Chris Pummet, “Investors run for the exits,” discusses why the rising inventory of unsold homes can be partially blamed on investors “dumping” their property.
Everyone looks to be in a hurry to get rid of their property now because they are worried that the market is going to get worse than it already is.
People are concerned that prices are going to drop further, making their home far less valuable as time goes on. This is a real concern for both regular home owners and investors alike.
“Spooked by the rapid U.S real-estate slowdown, investors are fleeing top-gaining markets and driving up unsold-home inventories that threaten to deflate prices in many areas.”
“The nationwide supply of unsold homes hit a record in July and sales fell 11 percent from a year earlier as rising mortgage rates and market leeriness sent buyers to the sidelines. Since investors and second-home shoppers accounted for an unprecedented 40 percent of last year’s buyers, their change of heart is having a staggering impact.”
Investors all across the nation are beginning to let go of their properties for a variety of reasons. Some bought the properties with very small down payments hoping to quickly flip the properties for big profits. But now, they are unable to flip them, so they owe a huge balance that they may not be able to repay.
This phenomenon is not just happening in distinct locales, but rather the problem is being seen from coast to coast, throughout the entire nation.
“On Virginia’s Eastern Shore, a long-sleepy peninsula now drawing retirees from New York to Washington, D.C., investors accounted for about half of all new listings from June through August, according to a search of multiple listing records. They also were the majority of sellers cutting their asking prices twice or more in recent months.”
“‘Nobody’s flipping properties anymore; they’re just clearing out,’ said David Lindahl, a Boston-based real-estate investment seminar leader. ‘They’re trying to unload whatever they can.’”
There are a variety of different things that have fueled this market slow down that has caused many investors to sell their property in a panic. It has a lot to do with lax lending standards and other mortgage industry related problems.
“The ranks of U.S. real-estate investors swelled from 2000 to 20005 as money fleeing the stock market moved into a more tangible asset, juiced by the loan salarys$$$ rates in 50 years and vastly loosened, mortgage-qualification requirements. In the last two years especially, countless U.S. investors bought multiple properties with little money down, rather than the 25% to 35% down-payments once typically required on investment property.”
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