As I sit here today I am reading through real estate related e-mails and articles and wondering if we are truly facing another wave of foreclosures or heading towards a tsunami style increase in home prices.  These emails and articles make it difficult to confirm their validity and weed through as each have their own agenda.  One email claims that an increase of foreclosures is on the horizon (selling tickets to a short sale seminar), another states the market is improving and this is the last month to get an excellent deal due before the huge increase in home values and the First time Homebuyer incentive expiring (new home builder trying to liquidate spec homes).

 As a real estate professional I find it imperative to keep a level head and not turn into Chicken Little with "the sky is falling" attitude.  Likewise I need to cautiously advise on the acquisition of real estate in our current market with care.  Really a Doris Day approach (Que Sera, Sera, whatever will be, will be) would be optimal, but when one is expending several years of salary on a home, it is not the time to be so carefree.

So you say okay Chad stop beating around the bush!  What can we expect?  Reality is, there is only One that can foretell the future, and I am not He.  But what I will address today is what some factors I will utilize to determine if another wave of foreclosures is on the horizon.  All I can say is to watch the how the feds deal with interest rates in the future.  If the Feds allow the rate to increase expect another wave of foreclosures as those 5 year ARMS (Adjustable Rate Mortgages) made in 2005-2006 will be at risk in 2010-2011.  An increase in rates for these type loans means an increased monthly payment with a higher risk of default.

There is one elephant that will remain in the room if the Feds keep the rates low over the next year.  At some point in time due to inflation the rate has to increase making the monthly payment on these loan structures less manageable.  With as much money as the Feds are printing to place in the outstretched hands of those companies/states, we are sure to see a massive increase in inflation and rates.  With this increase we will experience less buying power which will then lend itself to reducing home values as well as increased default of loans.

So my advice for those who are in an ARM is to either refinance, or negotiate a fixed rate with the few banks that are actually working with borrowers to modify loans.  If your bank is refusing to implement this aspect of the 2009 American Recovery Act (and if they accepted bailout money) try contacting your congressman to express your frustration with these banks. 

We are definitely in unique times and my heart truly goes out to those in distressed situations.  If you are having difficulty and are upside down in your home and facing foreclosing, don't wait any longer and contact me today as I will do my best to help guide you through these troubled waters. 

As far as the concern over a Tsunami style increase of home values, I'll address that another day or even year for that matter.  Although history does indicate this may be in our future, but as far as in 2010, I don't expect so.  

If you feel you are ready to purchase your next home feel free to give me a call.

I look forward to "serving you".