There is no doubt that the current real estate market in America is going through tough times and the consequences of the global economic recession have hit this country hard.Homeowners in particular are being hit hard as, with a rise in repossessions, strategic defaults and negative equity, some locations are experiencing property depreciation. This means that house prices are falling, often due to reasons beyond the reach of most homeowners in the area.
There are a variety of circumstances in which this unfortunate event can occur and it is wise to be aware of them so you can take any necessary action. And, if you are in the position of bidding on a new property, you should also use a mortgage repayment calculator to make sure that you can afford the repayments and do not default.
These include a high number of foreclosures in the area, the building of prisons or refuge centers in the location and the property being sold to unscrupulous landlords who exploit it solely for commercial gain without consideration for the area.
The drop in house prices as a result of these actions can be considerable. A recent Ohio news report detailed how the arrival of a scrap metal recycling firm was alleged to have depreciated house prices in the area by 25%.
Depreciation of any value is something that homeowners should try to avoid at any cost but, as in the example above, a drop of a quarter of the house value would have had a considerable effect on these residents.
If you are wondering how this would affect you, put your current numbers in to a mortgage repayment calculator and imagine how different the picture looks if your house is worth much less than when first valued.
For some homeowners, this would plunge them straight into negative equity. For any householder, it could be an upsetting and distressing experience, as people often become very attached to their homes.
It is understandable given the time and money we put into making our homes a safe and special place for us to live. The building of a prison or the opening of a homeless refuge in the area can have consequences.
Of course, these buildings are needed somewhere but unfortunately for local residents, it can be to their detriment. Ensure you read the local press or check on your state’s planning website to keep aware of any planning applications.
Even the building of supermarkets and shopping malls can have a detrimental effect on houses in the immediate area. The increased traffic and the powerful lighting used on these stores have made many homeowners feel like they are living in Disneyland!
As well as keeping abreast of planning news, keep an eye out for any other changes in your neighborhood that indicate things may alter for the worst. A number of foreclosed houses, for instance, would suggest the area might suffer in the future.
Foreclosed houses can attract squatters of both the human and animal varieties! In Florida, for example, it is not unusual for empty houses to become infested with snakes and other animals.
Often, landlords will buy these houses at knockdown prices and let them out for a quick buck. Unfortunately, the residents may not always be the best neighbors and this too can affect the property values of an area.
Look out for all these signs of the area depreciating and whether this will negatively affect your house price. These predictions may mean you can sell if necessary before the worst times come; fingers crossed they never will, but better to be safe than sorry.