What has changed??

I was reading the Suze Orman website,  and I think she has a good summary about the market.  Don't forget every market  is different so I am only speaking about the Queens NY area and what is going on here.  I would not say that real estate is a bad investment - ever.  But, if you can't afford something or have doubts about being able to afford it.  DON'T DO IT!  You know everyone says owning your own house with the white picket fence is the "American Dream", but realize that fence might need painting, fixing or replacing and if you can't afford to do all that - then You will always be fretting your next mortgage payment.  The American Dream in my opinion has changed, I think that it has evolved to be:  Maintain good credit, pay your bills on time, go on small vacations with your family, Play baseball, have fun with your kids, SAVE for your children for when they get older and teach them how to save themselves and last Be happy!!!  If you do all that and still live in an apartment - kudos to you!

Check out Suz Orman here -   

Inventory levels are increasing

Prices are starting to come down

I didn’t say the real estate market was going to bust, but I did say it was going to rust and that’s exactly what’s happening

WHY HAS THE TIDE TURNED?

1. Interest-Only Mortgages – When these mortgages convert from interest-only to principal and interest, and people start spending more and more money every month because the payments increase, where is everybody going to get the money to pay mortgages?
2. Higher Energy Prices – The price of gasoline and heating oil is rising. In the east and Midwest, heating bills are probably going to double this year.
3. Capital Gains Tax – Many people have seen their homes increase in value 100%-300%. The capital gains tax provisions that now allow you only to pay 15% on any capital gain revert to 20% after the year 2008.
4. Credit Restrictions – Bankruptcy laws changed on 10/17/05. Creditors are making it harder to get loans. Credit is getting tighter which means a lot of people can’t buy a home anymore because they can’t qualify for it.

SUZE SAYS

• In today’s economy, if you can’t afford a fixed rate mortgage, an adjustable rate mortgage that’s fixed for 3-5 years where you’re paying both principal and interest, then you cannot afford to do it.