We all know that for the past several years the housing market, and likewise the home loan lending market, has taken a substantial hit. Home values have been dropping for years, banks have severely tightened their mortgage approval requirements and the one thing that could really help the housing market – and increase in jobs – has yet to fully materialize.
While many home sellers and homeowners have been walking away from their homes, taking part in short sales and generally being very pessimistic about their future, there are some people who are able to take advantage of the generally bleak economic housing environment and actually take advantage of it.
How To Take Advantage of the Housing Crisis
To really be able to take advantage of the housing crisis you have to be on the “other side of the table” from those who are suffering the most. Right now it’s definitely a “buyer’s market” which means that home buyers have the upper hand when it comes to negotiations because there are so many homes available and prices are still low. That means that home sellers won’t get as much money as they hope, but homebuyers can often grab up a good deal.
So how can you take advantage of this situation? If you meet some basic criteria then you might be in the perfect position to come out ahead in this market.
First Time Home Buyers
If you are currently renting an apartment or home or living with your parents or have some other residential situation where you don’t have a place of your own then this could be your time to jump. House prices are low, mortgage rates are low, but credit is still a little tight. That means that banks aren’t quite as willing to lend money to just anyone who walks in off the street. It does NOT mean that it’s impossible to get a mortgage.
If you have good credit and a stable job then you can probably buy a house for 20% – $40% less than you might have paid for the same house three years ago. If you really want to get a good deal you could be brave and go for a short sale in which you end up trying to buy a home that’s been foreclosed on. In those sorts of sales, you’re actually offering a price that must be accepted not necessarily by the current owner, but by the bank that now owns the home.
Become a Real Estate Investor or Landlord
Despite what you hear on the news, not everyone is 24 and unemployed or unable to find a job and not everyone is 40 years old with a family and no way to pay the mortgage. Lots of people, young and old, are doing okay in this country and life is about normal or just a little less stable.
If you have some extra money from savings, real estate, or even other retirement investments then now might be the perfect time to put some of that money to work in real estate investments. Several years ago people would do this by “flipping houses.” They would buy a home, fix it up and then double or triple their money in just a year or two by selling it again.
While you can probably still do this in some markets, it’s not going to have the guaranteed price jump or profit margins it once did. However, the one thing this entire housing crash has created is a need for more rental apartments and homes. Home loan rates are lower than they’ve been in years so if you’ve always wanted to give renting or being a landlord a try, now’s the time! You have lots of people looking for places to rent (instead of buying) and you have mortgage rates that are in your favour.
Start Your Own Home Improvement Business: This might be a surprising area of growth and you have to be pretty handy for something like this, or at least know some handy people you could hire. It stands to reason this way: many homeowners that would have moved or upgraded homes in a normal housing market at staying in their current homes now.
That means that as the market recovers and equity slowly begins to rise again many people will want to begin adding on to their homes or at least upgrading what they have. Many down markets experience what is called “poverty fatigue” in which people get tired of living on a budget and saving money all the time and sometimes cut loose and want to spend their money on something they want. All those homeowners who are unable to sell their homes or haven’t moved, yet still have plenty of money, are going to need someone to do this for them.
In my own neighbourhood, I know two different construction workers who were laid off from their jobs. In just six months they’ve both been able to build up small handyman and home repair businesses right from their home. One neighbour actually run his whole office out of his truck, while another converted a closet in his basement into a small office. Both are fairly busy all the time.
Also Read: The Energy Efficient Mortgage
These are just some of the ways you can take advantage of the housing crisis. There are, of course, whole job industries that have actually experienced growth such as foreclosure companies, professional movers and even landscapers (banks pay them to maintain foreclosed properties).
Not everyone can have the resources or abilities to do well in a housing market that plummeted the way this one has, but it’s good to look at both sides of the coin and see the possibilities and opportunities that arise in any economic situation.