To say the residential real estate market is at a crossroads is the understatement of the current economic recession. After several months of gains in new and existing home sales, as well as price stabilization in some of the hardest hit local markets, the question going forward is: Can this housing “recovery” be sustained?
Taking into account the fact that most of the real estate data we report is seasonally adjusted, fall is still considered the slow season in real estate. Families are tied to the school calendar and younger, single business executives may be waiting for year-end bonuses.
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This fall, the residential market is facing additional headwinds. The expiration of the $8000 first-time home buyer tax credit at the end of November, which has added an estimated 200,000 buyers to the market, will undoubtedly take its toll. Realtor and home builder lobbyists are hitting Capitol Hill hard, and while several bills to extend and even expand the credit are on the table, budget-wary representatives are questioning continued housing stimulus.
Rising foreclosures are also riling the recovery, with various moratoria expiring and banks and servicers pushing properties through the system more quickly. Inventories of unsold homes, new and existing, have been falling over the summer months, but a new wave of foreclosures could reverse what was thought to be a promising trend.
Make no mistake, the government’s Home Affordable Modification Program is putting a dent in potential foreclosures, with over 500,000 trial modifications underway and more than 45 servicers participating. But with rising unemployment, fewer borrowers are qualifying for the much-needed modifications. The Treasury’s Assistant Secretary for Financial Institutions, Michael Barr, admits, “that challenges remain in implementing and scaling up the program.”
Finally, the mortgage market is still standing at odds with housing’s recovery. Much-needed mortgage reform is protecting housing’s future, but it’s a double-edged sword.
New rules for appraisals are slowing the mortgage process, and higher standards throughout the industry, and even the Federal Housing Administration is pushing some potential borrowers out of the market.
“On the whole, the new borrowers are at risk of not being able to be served, as FHA and the private mortgage insurance industry come under stress,” notes industry analyst Howard Glaser.
It’s a buyer's market, for those with good credit and substantial money to put down. Consumer confidence is gaining slowly, and investors are definitely draining excess inventory from the very low end of the market.
A real, sustained housing recovery will be slow to build, and unemployment is arguably one of its greatest impediments, but there are unprecedented opportunities in today’s real estate landscape; all it takes are the right tools, information and expertise to find them.
Here's what we have in our guide to help you through that process.
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