Home ownership should no longer be considered an investment, but a commitment that will allow individuals to plant roots and grow along with their community at large. With the new perspective on home buying, consumers need to take their time picking out their neighborhood as one false move from nearby residents can end up dragging home values down.
Prior to the mortgage meltdown, finding a great neighborhood was as easy as checking out the local school distract and taking a couple of laps around the block. Now the situation is infinitely more complex as seemingly booming communities are becoming ghost towns. Mortgage default is wide spread and McMansion owners are taking on boarders to make ends meet. This activity backed by sloppy neighbors can lower the fair market price of your homes’ value.
Bad Neighbors Drag Home Values Down
Since most individuals do not plan on living on a deserted island, making sure surroundings are up to snuff is an essential to maintaining home value. According to Joe Magdziarz, the president of the Appraisal Institute, a housing blight complete with cluttered yards, overgrown foliage and peeling paint can shave 5 to 10 percent off of the sales price of a neighboring home (MSN.com).
The pricing can be negatively impacted because of the glut of inventory available in the market place plus home sellers may find that their properties will linger for longer on the marketplace. Home buyers currently hold the upper hand as supply far outweighs demand. If a consumer has a choice of securing a home mortgage for a property next to a well kept home or located near the neighborhood eyesore, the former will always be a more enticing opportunity. That may force home sellers to discount their asking price in order to make up for the nearby deformity and prevent buyers from jumping quickly into the sale.
Foreclosure Drags Down Community Home Values
Consumers who have managed to keep up with their mortgage payments may experience financial loss courtesy of their neighbors default. Once a property becomes foreclosed, the lender becomes the official owner. Those homes are called real estate owned (REO) and since the lenders are not in the real estate business, they will substantially slash housing prices in order to offload the property quickly. It is not uncommon for REO properties to be offered for 30 percent off of the fair market value and private sellers may be forced to lower their asking price to compete with the bargains.
Real estate research firm Trulia.com reported that 25 percent of all of the nation's home sellers had slashed their listing prices in July of 2010. That activity occurred in 50 of America's largest cities. Since the housing market has yet to fully rebound, home prices are historically low nationwide and private sellers are begrudgingly contributing to the statistics.
World's Largest Grocer
Wal-Mart is the nation's largest grocery retailer and while many consumers rely on the stores to simplify their life, others believe the over-sized chain is responsible for dragging property values down. The decline in home values is attributed to the "Wal-Mart Effect," a term coined by author Charles Fishman.
When the big blue opens, local mom-and-pop shops cannot compete with their discount pricing and tend to lose their customer bases. That will impact their bottom line and for many, closing shop is the end result. That will result in more available commercial space. That can lower the communities tax base and force budget cuts that will then result in poorly kept neighborhoods, ultimately dragging down home market values.
Predicting the future of the neighborhood is an impossible task, but basic steps including getting to know the neighbors before buying and checking out the upkeep of city streets can help people get a gut feeling regarding the potential. If you have already checked those tasks off your list and are ready to take the plunge into home ownership, finding the best rates on mortgages is easy with industry leader, Mortgage Marvel. Mortgage Marvel is the premiere mortgage rate origination tool that will provide consumers with accurate mortgage rates, without requiring any personal information for the task.