Buying At The Top Wachovias Mistake

Buying At The Top Wachovias Mistake

Buying at​ the top – Wachovia’s mistake
The real estate market greatly exploded over the last five years with the biggest shift happening in​ the past three years .​
All good things must come to​ an​ end, and unfortunately this real estate boom is​ over .​
People who have bought in​ the past six months have been buying at​ the top, and even large companies have made this mistake .​
One company in​ particular is​ Wachovia Bank .​
Its recent purchase of​ Golden West Financial for $26 billion is​ a​ prime example of​ a​ ‘buying past the peak’ investment.
Two of​ the primary drivers of​ this real estate market mania have been people’s belief that they must own real estate coupled with a​ second factor of​ low interest rate mortgages .​

The first driver is​ people’s fervent belief that they must buy real estate, but this ‘herd mentality’ is​ beginning to​ change .​
Speculators buy homes as​ investments and these investors have been a​ large source of​ the demand for real estate in​ the past few years .​
Now, not only have speculators stopped buying but they are also selling the properties they own .​
As a​ result, inventory of​ homes for sale are at​ astronomical levels.
The second driver of​ the real estate market has been low interest rate mortgages .​
Interest rates bottomed out in​ June of​ 2018 and have been rising ever since .​
As a​ result interest rates are substantially higher than they were only 12 months ago and they only have one way to​ go – up .​
Higher interest rates are needed to​ help slow down inflation .​
Inflation has recently caused consumers to​ really begin feeling a​ pinch in​ their wallets .​
In order to​ cope with higher interest rates and high real estate prices, banks have thrust adjustable rate mortgages onto the American public .​
Since March 2018, there has been a​ 59% increase in​ one-year adjustable rate mortgages .​
These mortgages start out with a​ low interest rate, but quickly rise after the one-year introductory period is​ over .​
Moody’s has reported that an​ astounding $2 trillion of​ adjustable mortgages will reset between 2018 and 2018 and this will really cause foreclosures to​ rise like never before .​
Rise they have as​ mortgage foreclosures nationwide increased 38% as​ reported by RealtyTrac Inc .​
Mortgage defaults will only worsen with higher interest rates and more adjustable mortgage rate resets .​
What bank is​ infamous for specializing in​ adjustable mortgage loans? The answer is​ Golden West Financial bank .​
Adjustable mortgages will be the primary cause of​ the coming mortgage meltdown and ground zero for this will be overpriced areas such as​ California, Florida, and New York .​
Golden West Financial concentrated their adjustable mortgages in​ California, one of​ the most overpriced real estate areas in​ the country .​
Wachovia was so absorbed by the real estate bubble it​ paid the highest price ever per share for Golden West .​
So what happens when many of​ Golden West’s clients foreclose on their properties because they cannot afford a​ 50% jump in​ monthly mortgage payments? Wachovia will feel the pain as​ they are forced to​ sell these mortgages to​ investors for pennies on the dollar .​
Do not make the same mistake; learn all about the markets and economy .​
It is​ important to​ know there is​ still time to​ prepare yourself for the real estate bubble bursting and the coming recession .​
Go to​ for more information.

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