 |
What’s up With the Housing Crisis? | «« back |
| by FANTASI PRIDGON (Editor-In-Chief) | April 2010 |
Everyone has heard of the housing crisis, especially here in Las Vegas. It’s pretty hard to ignore. But what does it mean, how did it start, and how will it affect you?
We will begin with the subprime mortgage market (sounds a bit boring and complicated). When someone with a low credit score applies for a home loan they typically can only qualify for a loan with high interest rates -rates that are below the primeso far, so good. These loans were being given out in record numbers for at least the last decade. The appeal for buyers is easy to see; get something new and shiny now, and you don’t have to pay until later. It’s also important to note that most of these loans came with a hitch; low rates to start that eventually skyrocket within a few years. As it became easier to qualify for these loans, more people applied for, and received them. That means that more houses were needed, and that of course made the cost of houses increase dramatically. While the costs of homes were increasing, the home buyers income was not. So, when later finally rolled around, it came with a cost that most people couldn’t afford to pay and the banks started taking the homes back.
As banks started to fail they also started to increase the credit score needed to qualify for a home loan. That means a lot of people that could afford their homes are having a much harder time qualifying for a home loan. This left too many homes and not enough home buyers. Also, no one wanted to invest in risky mortgage companies and they subsequently started going out of business.
Add eager first time homebuyers with greedy banks and a blindgovernment then you get a country wide housing crisis. The number of American households faced with losing their homes skyrocketed to twenty-four percent in the first three months of this year. It’s still continuing to rise, and the number of the unemployed doesn’t help this matter either. Nationwide, almost 804,000 homes were given a foreclosure notice from January through March, up from about 650,000 in the same time span as the year before.
Things are starting to turn around in many parts of the country, but Las Vegas is still in crisis and it’s probably going to get worse before it gets better. As this crisis continues to spiral downward, it will keep affecting every area of our economy; the mortgage companies, homebuilders, construction companies, real estate, home furnishing and repair stores. It’s easy to see how irresponsible lending can bring down a country’s economy. On a brighter note, if you have a great credit score and a way to pay a mortgage, now is the definitely the time to buy a home. |END
 |