Foreclosure is just an unfortunate part of the real estate market...always has been, always will be. Even more unfortunate is the alarming spike in foreclosures on the national scene. Fortunately for Gibson County residents, foreclosure has never been an epidemic problem. The past two years have shown an steady increase in the number of local foreclosures and that is definitely a concerning situation. It is a situation that leaves us asking many questions. The truth is that foreclosure effects everyone in one way or another. Whether you are a potential buyer or seller, a real estate investor, a home owner, or someone that is actually dealing with the foreclosure process...the side effects hit close to home.
I feel that the best way to attack this local challenge is for everyone to educate themselves about the past, present and future of our specific local foreclosure situation. So here is my insight on the general subject, and I plan to blog about many more foreclosure specifics in the near future.
WHAT IS THE CAUSE OF THE RISE IN FORECLOSURES?
If you read the national headlines pertaining to this question, you will probably see a lot of speculation about unsavory lending practices, increase of high risk mortgages(i.e. Adjustable Rate Mortgages, Interest only mortgages, fifty year mortgages, negative amortization mortgages and so on and so forth), and the burst of the housing bubble. Locally speaking...I would categorize all of those reasons as non-applicable. From my recent experience and understanding of the Gibson County Real Estate Market, I suspect that it is due to a mix of the following conditions: Slowing of the economy, inflated cost of living, longer number of days on the market before a home sales, and the decline of local home value appreciation. Along with those possible reasons, of coarse we will always have situations in which home owners come across unforeseen circumstances and just aren't able to afford their homes.
HOW DOES THIS AFFECT ME?
As I mentioned before, foreclosure affects everyone in one way or another. As a prospective home buyer...foreclosure actually can provide good opportunities. With a higher number of foreclosed homes and longer times for sale, lenders are feeling the pressure to unload such homes, often for less than market value. Most foreclosed homes need a little work, but much of the time it turns out to be positive situation for the home buyer. Investors are also making out good as a result of these conditions. It definitely helps make the argument that "Now is the time to buy".
As a home owner/seller, the scenario is not as sunny. With a larger number of foreclosures in the county, it is likely that there may be a foreclosed home or possibly several of them in your specific neighborhood. Foreclosed homes are usually vacant and often in disrepair. This situation may cause your home value and the value of your neighborhood to suffer. This isn't always true, but it is possibility and home owners should always make themselves aware of foreclosed homes in their neighborhood.
WHAT CAN WE DO ABOUT THIS?
In my opinion, this is the most important question of all! Well...it's going to be a community project. I figure that the rise in local foreclosures is a direct result of the several contributing circumstances occurring throughout the past two years. It makes sense that it may take at least two years of changing circumstances before we see a slowing of recorded foreclosures.
Future home buyers should be very aware of all the local conditions and projections that I have previously discussed when they are making decisions about what they can afford. It may be wise for home buyers to get themselves into mortgages that they can manage very easily. Stay away from adjustable interest rates and be very realistic about what you can afford monthly. This is where it will start. As for the community as a whole, I think it is important for home owners to do what they can to build equity in their homes. If tough times arise, home equity can help keep home owners on top of things until a plan is derived. Another thing that I think is important is for everyone to take a real pride our community. Supporting the local economy will go a long way to help.
I will conclude by offering this: if you do find yourself in a looming foreclosure, YOU HAVE OPTIONS!!! I say...don't give up. The most important thing you can do is to keep an open line of communication with your lender. Much of the time, the lender with be willing to work with you if you are behind on your mortgage payments. You may be able to buy yourself much needed time that will hold off a pending foreclosure until you can put together a new plan. There are so many options for you. I will be blogging about these options in the very near future.
Stay tuned and stay informed
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