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Is a Recession Going to Increase Foreclosures and is that a Bad Thing?
| | Monday, September 22, 2008 @ 02:22 PM EDT
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Contributed by: Jeff Adams
Jeff Adams Properties
Read more archived articles about Foreclosures
Real Estate expert, Jeff Adams, says that a slow down in the economy will not necessarily be a bad thing for real estate investors who know what they are doing.
We have gotten to a stage in our global economy where it looks likely that there will be a recession. While no one really wants to have to face one and while some economists still argue that what will happen will be a severe economic slow down rather than a full-blown recession, I take the view that they are hair-splitting.
Whichever happens the results will be largely the same: tough times for the economy and for everyone involved in the service industry and that includes real estate. Which means that it will be harder for people to get credit (and there is already evidence of this) it will be harder for them to get mortgages and it will be harder for them to meet their payment commitments.
All of this brings us around to the ‘F’ word. Will foreclosures go up or down? Logically, you expect them to increase but logic and the economy are not always synonymous and a tough financial market may force many mortgage providers to do what they have not been doing up to date which is negotiate with some of their borrowers to arrange for better terms in repayments so they do not go into default.
This is not the same as granting a license for everyone to renegotiate their payments and some defaults will inevitably happen because this is exactly how our economic model has been set up. But it does mean that there will have to be a dialogue and a carefully worked out set of criteria to help those who may just need that little bit of a helping hand.
Naturally a recession puts everyone under pressure and foreclosures present real estate investors with a golden opportunity to set up the perfect conditions which will benefit not just themselves and the lending institution but also new home buyers who may not be able to afford to get on the housing ladder at today’s exorbitant housing prices and tough lending conditions.
An increase in foreclosures, as long as it is a natural reflection of the real estate system rather than an abnormally high number brought about by indiscriminate lending practices, is just the ‘shot in the arm’ that the economy needs in order to start reviving.
It releases ‘frozen’ properties back into the market, it helps to create new future spenders as people buy properties which then need to be upgraded, furnished and then perhaps sold on as they move on to better and bigger things and it allows the economy to start moving forward again.
An economic recession, or a slow down, is just another set of opportunities for savvy real estate investors to help create the conditions that generate wealth for everyone concerned and that is, surely, a great thing.
Jeff Adams
Note: This article was written by Jeff Adams, a national author, speaker and trainer who has done over 350 deals over the past 12 years. http://www.FreeForeclosureCourse.com
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