Another Drop In Value Headed For Property?

You may not like roller coaster rides but may find your self on one nonetheless, if you are a home owner because real estate is set to drop this year after recovering some of its 2008 gains.

A trio of gathering government storm clouds will be responsible for the drop that some predict could mean another 10% to 15% slump in prices, they say.

After a 36 month departure from the peak of the real estate market, the topic is still real estate and the current trend in prices . Despite the bad news, real estate appreciation was actually reported across the nation in 2009, but it is doubtful for 2010.

The first shoe to fall was last week’s Federal Housing Authority announcement that it would tighten its loan standards in light of defaults that had pushed the agency’s reserves well below its mandated level.

Due to the inundation of foreclosures, the FHA reduced the number of qualified buys by forcing those with the weakest credit to pay higher payments for mortgage insurance, increasing the required down payment and limiting seller contributed closing costs.

With fewer people having high enough credit for standard loan programs, more people have turned to using FHA backed financing to get their loans done.

With unemployment swamping the real estate market with foreclosures, many buyers have an easier time getting qualified with FHA loans, so they are increasing in popularity. Being forced to utilize FHA type loans, many buyers are finding a great resource in them in a time when conventional loan money is more than difficult to get.

FHA programs do not seem to be fading in their role in the real estate market, despite the higher requirements to get one now. First time home buyers and people with lower credit would not be able to buy without similar programs.

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