Why the Housing Market Is Where It Is

September 4, 2007

There is a lot of talk about the housing market right now.  For some reason, many people are scratching their heads trying to figure out just how the market got into this position.  A preliminary look at industry just a few months back gives most of the answer.

The housing market was beginning to slow.  Interest rates had hit the lowest in many years.  Lenders were desperate to keep the houses moving and the money flowing.  Unfortunately, most of the top borrowers had already borrowed everything that they could. 

This is when the industry began to plunge itself into the despair where it now lays.  It began to develop programs for the “less than ideal” borrower.  The Lenders seemed to be more concerned about getting the next contract than they were about insuring the contract would be fulfilled.  As the interest rates began to inch upwards, the borrowers (that couldn’t really afford to borrow in the first place) found themselves lodged in a tight space.

Now the foreclosure rate is going through the roof instead of the profits that Lenders were hoping for.  Some have suggested that there needs to be some kind of bail out.  I say, let the chips fall where they may.  It may take a little time, but the housing market will eventually find its feet again.

Posted in Home Values, The Market