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Michael Kling

Housing Crisis Makes Location More Important

Friday, January 7, 2011 - Article by: Michael Kling - Total Mortgage - Message

Location is even more important for home buyers following this recession we just experienced. The long-standing proverb is more valid than ever. The 3 most important things to remember for judging property are location, location and location. That is the conclusion drawn by the a study sponsored by the Mortgage Bankers Association.

While many housing markets may see home values go up and will recover fully, some seem to have already reached a tipping point and will extended or potentially even permanent impacts, according to the "Study of Real Estate Markets in Declining Cities." Some areas might never again be economically viable. Do you think you're ready to purchase a home?

The bottom line to home buyers: stay clear of cities with shrinking populations. In the past, declining cities were usually rust belt areas with shut down manufacturing plants. However, these days the real estate collapse is creating a new classification of declining city - places that had overbuilding and therefore resulting in a substantial decrease in home values. The research cited Stockton, CA, and Cincinnati, OH as examples of declining areas. But even certain neighborhoods in those cities varied dramatically.

"The extent of the decline is not shared equally or proportionately," commented senior fellow at the Rockefeller Institute of Government at the State University of New York and author of the study, James Follian.

Predicting if a real estate market is enduring a passing or permanent decline is very difficult. This means home buyers and mortgage lenders will favor areas with easily accessible information that could help them more accurately gauge their future prospects. Home buyers and mortgage lenders will tend to steer clear of neighborhoods with vast amounts of foreclosures, vacancies, and deteriorating homes with delayed upkeep.

Home values will get a boost when more home buyers can qualify for mortgages and more normal expectations for the housing market's future resurface, he commented.

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