Right now, the future of the stock market is uncertain, and even though it seems to bounce back some days, triple-digit losses occur again other days. Many agree than the financial crisis is going to get worse before it gets better; unfortunately, this is hurting the already-floundering real estate market.
According to reports by CNN, the current crisis on Wall Street is causing potential homeowners to put off buying. The National Association of Home Builders has seen contract cancellations jump, with up to 30% of people changing their minds. In addition, the National Association of Realtors has reported that about 25% of their clients have decided to hold off on the new home.
People are planning to buy. Real estate open houses are still booming and agents are continuously busy showing houses. However, the financial crisis has meant that all of these house hunters aren’t getting past the planning process. As people see their accounts drain, they no longer can afford the house in the same price range as just a month ago.
Other buyers simply think they’ll get a better deal if they hold off – and they may be correct. As banks see deals get cancelled, they itch to make sales on the foreclosures they own. Current homeowners, in some cases, are also hoping to make a sale in order to downgrade, as they are worried about their market investments. Some, specifically those heavily invested in Washington Mutual, Leman Brothers, and other drowned companies, need to sell their homes, and potential buyers are hoping that this desperation will help to drive prices lower. Agents are already seeing sellers willing to give concessions in order to make the sell, and some buyers who are opting to wait hope that this will increase in the coming months.
Of course, the financial crisis isn’t just affecting residential real estate. Even more, commercial real estate is hurt by the sinking economy. Financing for commercial real estate projects is getting harder and harder to find, and those who are willing to lend money have significantly lower limits with significantly higher interest rates. Simply put, banks are scared, and justifiably so.
Surprisingly to some, the answer to the housing problems might be green building. While homebuyers are shying away from investing right now, they are increasingly interested in energy efficiency and other eco-friendly real estate choices, which may give desperate sellers a way to seek out homebuyers that really are ready to make a purchase.
Over the next year, the housing market will likely change drastically. As the market continues to spike and plummet, people will continue to make modest investments, prompting many to believe that the real estate market, which seemed to be picking up speed again, may not have hit bottom just yet.
