Will the sub-prime crisis drive up the real estate market?

Question

All those families who lost their home in the mortgage crunch still need to live somewhere. If they all begin renting, won't it drive up the rental market and in turn the real estate market?

Answer 1

It may drive the rental market up a bit but the down effect of these houses coming on the market will undoubtedly overwhelm the slight up effect of investors buying more places.  In general the sub-prime practices caused overbuilding so you can expect prices to moderate until all those extra houses get filled which won't happen for a long time in some areas (others maybe there is no overbuilding but people who would've moved there can still go a little further out to get something cheaper).

So, yes the excellent investment environment in some places may have an up effect but the down effect on the overbuilding (which caused the excellent renting environment in the first place) is still in charge.

Answer 2

god i hope so...

Answer 3

I doubt it. There are too many other factors to consider- one being the cost of gas, which in turn pushes up the cost of food. Also, I think credit is going to be much more closely scrutinized, even for renting apartments. You will probably be seeing people moving in with friends and relatives to get back on their feet. It may take one of more years to see things in the real estate market start to settle. I think it will then take a couple of years for the real estate market to start to rebuild from there. Now is very much the time to buy though, if one can afford it.

Answer 4

No it is actually doing the opposite. Since homes in your neighborhood are going into foreclosure, all surrounding homes are afftected and declining in value. Almost everyone is under in their home right now.

Yeah everyone is renting now, but who WANTS to rent?

Answer 5

no it will nut

Answer 6

No, there are HUGE losses in the housing market as a whole...across the board (the sub-prime market has now effected large mortgage lenders who are trying not to collapse and are seeking Federal assistance).  

We have just begun seeing the damage that the greed of those driving sub-prime mortgages has done to the housing industry.

Renters do not affect the housing market at all - buyers do, and right now, foreclosures do.

Buy it up now if you can :)

Answer 7

I'm not a broker; but my hunch would be no because these foreclosed homes are not being purchased for pennies on the dollar.  They're being sold for what's owed on the note and if someone purchased a house for $260k 2 yrs ago then the mortgage company owes that $260k even if they made payments and they're not going to take a bath on every house.  If nothing else it might help level off the down slide; but not boost it back up once the rates go back up next year to around 8-9%.