Sound familiar:
Professionals who fake home appraisals are helping fuel a rise in mortgage fraud in Indiana, bilking would-be home buyers or lenders out of millions of dollars, officials warn.
Oh great, another “negative” story on the industry, yeah, it is. But this one is dated November 12, 2002 and appeared in the Cincinnati Enquirer in an Associated Press article.
I wish I could find these “experts” and find out what they are doing now. They hit this market on the money.
Authorities say mortgage fraud drives up foreclosure rates, promotes urban blight and hurts property values in some areas because when lenders realize the homes are worth much less than originally appraised, they usually don’t fix them up.
Of course there predictions weren’t very hard. Simple economics — and physics — drive the economy: what goes up, must come down.
However, too many people are focusing on today, without keeping in mind — any time something of value goes down, it bounces back. The markets are like a pendulum, first they go too far one way, then too far the other, and finally settle on a nice equilibrium.
So if you are riding the housing market’s pendulum hold on tight and enjoy the ride.
Photograph by Bailey Kirkpatrick and used with permission.
Toby Boyce
April 18, 2008 at 7:12 am
One point to keep in mind though is that the pendulum effect only works if the property has true value.
Enron stock will never bounce back.
Some of these housing developments may never bounce back.
You need to know your local market, or find an agent that does.
JBourne
April 18, 2008 at 10:14 am
I agree with both of you, although I wouldn’t really classify real estate in the same league as Enron and other big name companies with huge stock drops.
The real estate market always goes through a cycle just like the economy. Many economists will describe it as a healthy cycle because it weeds out inefficient elements, such as houses being overvalued, people getting mortgages they can’t afford, and lenders giving out mortgages they don’t have the money for and just write off to people willing to invest in bonds.
Landflip
April 18, 2008 at 11:56 am
There are times that I feel like some get better home appraisals than others. In some cases with some professionals it is all about who you know and what they are willing to do. We can act like this does not happen, but I think in some cases it does. From what I hear, the banks are cracking down on this and paying more attention to what appraisers are doing.
About the market…yes it will eventually swing back, but the questions how long will it take!
Jayson
April 21, 2008 at 10:57 am
I agree that the market will bounce back – the lingering recession will definitely play it’s part and hold the market back but it will come back. Toby brought up a great point about real estate being local, there are better areas than others and it’s important that we all recognize and learn about the best areas in every market.