Real Estate Information

Luxury Real Estate Information


Rancho Palos Verdes, California Homes
Palos Verdes, California Homes
South Bay, California Homes
Luxury Mexican Beachfront Homes

Featured Properties


Oceanfront Estate Near Trump National

Related Information


Loan Information
Real Estate Information
Mortgage Refinance Information

Home Equity - Don't Spend It on Risky Investments


The housing market has exploded in the last five years, and homeowners are finding that the equity in their homes is greater than it has ever been. The equity in a home is the difference between the market value of the home and the amount still owed on it. As home prices increase, so does the equity for those who own their homes. In parts of California, home values have tripled during the last five years, and homeowners are doing increasingly risky things with their newfound "wealth." Anyone considering borrowing against their home's equity should carefully consider the possible pitfalls of doing so.

Traditionally, most home equity lending was done for purposes of home additions or remodels. These have been considered low-risk loans, as the house is collateral for a loan that improves the house itself. As a bonus, the improvement usually increases the value of the home, making the loan even safer for the lending company. Occasionally, homeowners default on such loans, but the foreclosed property can easily be sold to recoup the loss. Times have changed, and many, if not most, home equity borrowers are now using the money for different, and riskier purposes.

Thousands of people who have suddenly found themselves with hundreds of thousands of dollars of equity in their homes are treating that value as a windfall of cash. Instead of traditional uses, such as home improvements, borrowers are using their equity to buy more real estate to use as rental property. There are cases of individuals with homes valued at several hundred thousand dollars who have borrowed against their equity, bought more property, borrowed against that equity, and repeated this process six, seven, ten or more times, attempting to build up an empire of rental property. It's hard enough for most people to manage one mortgage, but some people who are caught up in the "equity frenzy" are now managing ten or more of them! On the surface, it may appear that these intrepid individuals are simply taking advantage of an opportunity, turning several hundred thousand dollars worth of equity into millions of dollars worth of rental property. On the other hand, these "investors" may be inviting disaster.

As more and more people buy real estate on speculation, the equilibrium of the real estate market is affected. The additional competition among buyers, fueled by the real estate speculators, is causing prices to go up even more. Eventually, the market is going to peak. Buyers who need a home to actually live there can only pay so much for them before the homes simply become unaffordable. And not every speculator can own ten rental properties, as the market can only support so many rental properties before the market becomes saturated. Once that happens, prices will fall. And when they do, all of these buyers who purchased their homes using their own home's equity will find themselves under a mountain of debt.

It's nice to have some equity in your home. It's also nice to be able to borrow against that equity for home improvements or debt consolidation. Using your equity as though it was cash you can freely spend is dangerous, as many speculators will soon learn.

Copyright 2005 by Retro Marketing.

Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a Website devoted to debt consolidation and credit counseling information and HomeEquityHelp.net, a site devoted to information on mortgages and home equity loans.


MORE RESOURCES:
This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news


Wall Street Journal

Luxury Real Estate Runs Hot and Cold in Europe
Wall Street Journal
After a long, steep downturn, real estate in the French capital has finally got its joie de vivre back. The political landscape under President Emmanuel Macron, along with low interest rates, have helped reverse prices' downward trajectory. The average ...



Miami Herald

Some impacts of new tax law on local real estate are clear. Some aren't.
Miami Herald
Even though the sweeping tax reform bill was signed into law on Dec. 22, the massive document is so dense that even seasoned real estate professionals aren't entirely sure what it will mean for Miami. While some of the bill's real estate provisions are ...



Bangor Daily News

Miami real estate developer buys former Bangor Macy's
Bangor Daily News
A subsidiary of Lionheart Capital, a Miami-based real estate development and investment company, closed on its purchase of the former Macy's department store property at the Bangor Mall earlier this week. Ten-X, the online auctioneer that sold the ...
Florida Real Estate Company Purchases Former Macy's at Bangor MallWABI

all 2 news articles »


Press Herald

Southern Maine's real estate market still riding high, experts say ...
Press Herald
But headwinds from a stalled marijuana industry and an abundance of hotels in Portland could slow further growth, said presenters at the Maine Real Estate and Development Association forecasting conference Thursday. By J. Craig AndersonStaff Writer ...

and more »


The Mercury News

Transcript: Trump dossier initially focused on real estate
The Mercury News
WASHINGTON — Research that led to the creation of a dossier alleging a compromised relationship between President Donald Trump and the Kremlin focused in its early stages on his real estate projects, a history of his tax disputes and “opaque” business ...

and more »


Gecina: Parisian Real Estate Player To Have A Strong 2018
Seeking Alpha
The company has made some excellent strides recently, and shareholder value has been increasing. Recent efforts on specializing on Parisian real estate assets (shedding non-core assets), as well as a recent combination with Eurosic, makes Gecina a very ...



Forbes

3 Commercial Real Estate Trends To Watch In 2018 - Forbes
Forbes
Political and economic uncertainty has pervaded the past year, with the U.S. economy showing signs of growth amid low inflation and a distressed retail segment in 2017. Here's a look at three commercial real estate trends to watch in 2018.

and more »


It May Not Be Time To Fear Stocks Yet, But Perhaps Real Estate
Seeking Alpha
Euphoria seems to be taking over the stock market with frequent stories of new highs - but what is more important is how strong the stock market performance is relative to the bonds. Month-to-date through Jan. 18, 2018, the S&P 500 is outperforming the ...



Bitcoinist

Spain: First Real Estate Sale Using Only Bitcoin in Country
Bitcoinist
Mister Piso, a real estate company based in Spain, has sold the first piece of real estate using Bitcoin as legal tender. The company is hoping that a shift into cryptocurrency could accelerate sales and revitalize the housing sector. Bitcoin and ...

and more »


The Advocate

Stamford couple forms successful real estate team
The Advocate
STAMFORD — Barbara and Harry Webski make a good real estate team: she sells homes and he runs a construction business. And it doesn't hurt that they've been married for 43 years. “We've been doing this together a long time,” said Harry Webski ...

and more »

Google News

home | site map
© 2006 TIGER MEDIA