The up side of the foreclosure crisis and downturn in real estate values

Yes, there is an up side, at least for some people. The depressed prices in the current real estate market could be good news for some prospective home buyers, particularly first time buyers who do not need to worry about selling their current home. Even for those who do have a home that they need to sell, their ability to afford an “upgrade” may never be better.

In addition, the foreclosure crisis is causing a crack down on predatory lending. This will benefit new home buyers by helping to make sure that their mortgage is a legitimate loan product, and does not include provisions that will become a problem for them down the road. This also can benefit sellers, since, while there are fewer prospective buyers right now, today’s buyer is more likely to actually be able to afford the home.

Because the Metro Detroit real estate market did not see the dramatically inflated prices that we have seen in some other areas of the country, it appears that our area should be among the first to rebound. The rebound may be relatively slow, but it will almost certainly come. While many prospective buyers are being cautious right now, I believe that the current market represents a nearly unprecedented opportunity for buyers who are able to qualify for a conventional home loan. Interest rates are still in a reasonable range, and people with a good credit history can still qualify. There are also programs for first time home buyers that provide down payment assistance to help make payments more affordable.

The current economic downturn is not going to last forever, and eventually buyers will begin to return to the real estate market. Those who enter early are more likely to be rewarded.