Foreclosed Properties Continue to Drag Down Construction of New Homes: What It Means for the Average Joe

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New housing starts are up; they rose by 7.2% in March. But, according to today’s report by Reuters, this does not mean that the foreclosure crisis is over. The article,  U.S. home building rises, foreclosures a threat, states:

. . . [new home] construction . . . continues to be dragged down by stiff competition from a flood of foreclosed properties. . . . With both the demand and need for new homes still very low, housing starts aren’t going to enjoy a more meaningful recovery for a few years yet.

Home Foreclosures Make Market Years Away from Recovery: What It Means for the Average Joe

1. Buy homes cheap: Quite frankly — deals. If you’re in the market to buy a home, now’s a good time, especially when coupled with some of the lowest interest rates around in decades.

2. Financial security: Buying cheap foreclosed properties can set you up for life — if you’re smart about it. As my stepfather used to say, “They’re not making any more dirt.” What he meant was, God ain’t creating no more earth. So if you invest smartly, real estate is a sound investment whose profits won’t blow away in the wind like say, stocks.

But, this isn’t all. The housing news means that many homeonwers have some hard choices to make. Namely . . .

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3. Is it time to walk away from your home? As the experts state, it’s going to be years before the housing market recovers. And, according to Suze Orman, a financial expert, who was featured on a recent episode of the Joy Behar Show, many of these property values are never coming back.

So, as she says, many homeowners have to get real and face the “new American reality.” If you’re underwater on your home and are holding on  hoping that its value will come back — and financially destroying yourself in the meantime — it may be time to let go.

3 Options for Homeowners Who Want to Walk Away from Their Mortgage

A short sale: Click to learn what this is. FYI, if you do a short sale after December 2012, you will be responsible for paying income tax on any “shortage.” What do we mean?

Home Foreclosure and Taxes: Important Tax Consequences of a Short Sale after December 31, 2012

For example, if you owe $200,000 on your home and you sell it for $100,000, the government will tax you on the $100,000 difference because it’s seen as a financial “windfall.” So if you’re going to do a short sale, be sure to do it BEFORE December 31, 2012.

Remember, in this market, it’s taking homes months and months — some more than a year — to sell. So if this is an option you’re considering, don’t delay too long. FYI, the tax break applies only to primary residences.

A deed in lieu of foreclosure: Learn what a deed in lieu of foreclosure is and  all important difference between “with recourse” and “without recourse;” and

Chapter 7 Bankruptcy: Learn more about this option, and if you should reaffirm your mortgage debt.

Hard choices indeed.

Related Posts

Home Foreclosure News: 9 Million Homeowners Could Go Into Foreclosure Between 2009 & 2012

Stop Foreclosure: How to Ready Your Home for a Fast (Short) Sale

Stop Foreclosure: The Secret Your Lender Won’t Tell You That Can Help Save Your Home

Stop Foreclosure Help: What Happens When You Stop Paying Your Mortgage

Stop Foreclosure: 1 Really Easy Thing You Can Do to Buy More Time to Save Your Home

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Copyright © 2011 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

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