How The Housing Market Got Into The Situation It’s In Today…
You see,the real estate market is controlled by supply and demand ‐ during the boom, homes were getting snapped up left, right, and center. Even though it seemed like everyone tried to fill the demand for homes all at once, there still weren’t enough homes to go around.
A lot of people–including builders,developers,investors, and banks, just to name a few –saw the new demand for homes as an opportunity to make a lot of money…and they all started building homes to fill it.Everyone seemed to think there was no end to the good times and fast cash.
It wasn’t uncommon for someone making a 5‐figure income to get a loan for hundreds of thousands of dollars (if not millions of dollars) to invest in real estate, or for a newbie invest or to make a $50,000 profit flipping a home.
Before long, the demand filled up and there were more homes for sale than buyers available to buy them; however,a lot of homes and developments were in the middle of construction and were too far along to be stopped.
Home sellers started having to drop prices to attract buyers and slowly but surely, the market conditions spread across the country –starting with the most vulnerable markets like Florida and California, and eventually spreading to the most stable markets in the world. It seemed like a bad cold that just kept spreading and wouldn’t stop.
Before long, it became so rough that most of the people who bought a home or refinanced in the last 5 to 10 years were upside down on their mortgages. This forced homeowners to come up with money in order to sell their homes.
Otherwise,they had to get the bank to do a short sale (meaning the bank accepts a lower payoff on their mortgage than they are owed).This caused the banks to repossess more homes than ever before and drastically slash prices to get rid of them.