Much Ado About Foreclosures
It is difficult to ignore headlines about the increased rate of defaults in ’subprime’ mortgages. Southern California, Florida, Texas and other fast-growing areas of the country, where most of these loans were originated, will certainly feel some impact.
But aside from isolated local impacts and the possible reprecussions on Wall Street as bankers absorb a wave of bad debt, the affects of these foreclosures should not be felt nationally.
And the local picture does not look too bad either.
The Inland Empire of Southern California is one region where remodeling activity might be affected. In this area, just east of Los Angeles, new homes have been built at a rate of 27,000 new homes annually over the past five years. This rate of new home construction was kept alive due largely to the efforts of create mortgage underwriting.
Some buyers were offered 50-year mortgages in order to be able afford a new home. Other buyers were not required to list a source of income. These are bad practices for which a real correction is necessary and healthy. The good news is that remodeling activity is still growing (albeit more slowly) and that population and job growth in Southern California will support new growth in short order. It is projected that there will be another 3 million people living in Riverside and San Bernardino Counties over the next 10 years.
Florida and Texas are similar to Southern California. They are in the sunbelt and their economies will ultimately recover. The latest report from the Joint Center for Housing Studies “Foundations for Future Growth in the Remodeling Industry” support this assertion. Some of the fastest areas for remodeling growth over the last two years have been in these areas.
- The remodeling market inTampa, Fla. was up 26.7%
- Miami was up 39.5%
- Houston was up 9.2%
Located in the Sunbelt, these are non-traditional remodeling markets, but as the median age of homes rises, renovation and remodeling are required.
But beyond these local concerns, the overriding reason why the national remodeling market will not experience any hiccup associatied with mortgage foreclosures is the demographics of the impact.
Much of the professional remodeling market activity is coming from upscale clients. Very few of these higher income clients and their higher dollar kitchens, baths, room additions, and whole-house remodels will be curtailed by higher foreclosures at other income levels.
Take a look at “Foundations for Future Growth in the Remodeling Industry”, the recent report from Harvard. The remodeling market is strong in so many ways. It is a great place to build a future. And fearmongering about mortgage foreclosures should be taken for what it is.
Great post. real useful info, thanks for sharing.
“It is difficult to ignore headlines about the increased rate of defaults in ’subprime’ mortgages.”
Everyone (including those with lethal-mortgages) should investigate the benefits of equity acceleration:
More and more folks are using a Home Equity Line of Credit (HELOC) as an interest cancellation account to accelerate their home equity and payoff their home *years* sooner than listed on their mortgage amortization schedule.
Unfortunately, today’s Real Estate market means that folks can no longer count on appreciation to build home equity. Those who realize that they need to pay down their current mortgage debt are looking for alternate ways to aggressively (yet safely) build equity.
And they’ve discovered a perfect online system to do that; they can focus on their wealth accumulation goals while accelerating their equity simply by using a Home Equity Line of Credit to ‘power’ the Money Merge Account™ financial solutions program.
A typical 30 year loan (of whatever type) can be paid down in 1/3 to 1/2 the time — it’s a great way to save *huge* amounts of income by eliminating a mortgage amortization front-end interest load. (On a million-plus dollar home, I’ve personally seen where the Money Merge Account™ program will save the homeowner $750,000 in interest charges!)
And the best thing – homeowners don’t have to refinance their existing mortgage or, in most cases, make any adjustments to their lifestyle.
It is unfortunate that most of us were never taught to follow three essential principles: (1) Avoid paying interest, whenever possible, (2) Use other people’s money, whenever possible and (3) Find and use a financial system that will guide you, especially if you have the tendency to go off-track. The Money Merge Account™ software and the program’s counselors use these principles to keep each homeowner focused on their wealth accumulation goals.
I’d be happy to provide further details…
The normal period to pay mortgages is only 15-30 years (correct me if I’m wrong) and this one is 50 years? That’s a long wait to own a house.
-Jan