Foreclosure Crisis 2!
Updated: August 21, 2010
The real estate market
continues to wallow in a deep long-lasting depression. This is due
to:
- Persistent high
unemployment
- Reductions or
elimination of overtime pay
- Wage reductions - hour
reductions
- Tighter mortgage
lending standards
- Skyrocketing
adjustable rate mortgage payments
- Inability to refinance
due to tighter credit standards
- The end of government
incentive programs
According to RealtyTrac the most respected source, one in 400 U.S.
households received a foreclosure notice in the month of May.
According to them the "foreclosed inventory is likely to get worse."
The Mortgage Bankers
Association reported that mortgage applications are tumbling and
have fallen five weeks in a row. Does that sound like a housing
recovery to you?
Also, house values have not
stopped falling when viewed on a national basis. Economists at
Goldman Sachs are predicting that housing prices will fall around 3%
nationally over the next year.
Anyone who buys a home today
may end up owning more than the place is worth in a year or two -
not a big incentive to buy! Even record low interest rates aren't
tempting many to enter the market these days.
The foreclosure rate is
still above 300,000 per month and could hit an all-time record this
year. Housing starts are at a decade low record level. 11 million
Americans are "underwater" meaning they own more than their house is
presently worth.
A new wave of new
foreclosures could hit later this year, especially if the
unemployment rate stays up. "It's not anything like a recovery yet"
adds Rick Sharga, Senior Vice President of RealtyTrac.
While up 'till now the main
source of foreclosures came from those who purchased homes they
simply couldn't afford - the subprime crowd, now we're seeing a
growing number of foreclosures among buyers with average or better
credit and income ratings. This is an ominous sign for the
future.
Thomas Lawler a housing
economist predicts "you are highly likely to see an acceleration in
the number of actual completed foreclosures."
The Obama
administration's $75 billion foreclosure prevention effort has made
only a very small dent in the overall problem.
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