What the recession has taught us about the real estate market

19 October 2010

** Guest post today is contributed by LearnVest **.

Many things have happened in the last two years: from the collapse of Lehman Brothers to the rescue of Greek, complex forces were at work.We talked about a lot of young people who are considering purchasing a first home, but there is great that around because the real estate bubble burst of firstly don't realize. Although some homeowners suffered massively, other houses has lost some value, but were fundamentally good (Hi, MOM!). What gives?

The answer lies in an old slogan: "all real estate is local." real estate recession was not a massive collapse, but many. We'll look at some important factors so that, if a curve ball that comes around again, you know how to tap.

Mortgage funny business.

In the early 2000s, many lenders offer mortgages to people who do not understand and couldn't afford them. This belly whole dirty business mortgage is known as "subprime loan." As those homeowners stopped paying their mortgages, we saw a wave of foreclosures.

The moral: don't take a mortgage that you don't understand.
Read more: Confessions of a subprime lender: story of a member fraud, greed and ignorance, by Richard Bitner.

Lot of speculation.

Although real estate deals of wars took place in lots of different cities, there was something special about places like Las Vegas and Miami, where the new study taking just coming and investors only required to pay more … until that they didn't. the ultimate investors were left holding the property which did not wish to ever own long-term.The worst of the crisis (and half of all mortgage defaults) took place in the States "sand": California, Florida, Arizona and Nevada.

The moral: don't buy a home that you're not willing to live in for at least five years.
Further reading: the great acronym, by Michael Lewis.

Read the rest of this interesting breakdown of real estate market in LearnVest today.

View the original article here