High unemployment is the biggest obstacle to the U.S. housing markets recovery as fewer people qualify to buy homes, but the imposing obstruction is being helped by a series of government programs and a private company working with some of the nation’s biggest mortgage lenders to keep homeowners in their homes. As a result, Housing Predictor has upgraded its national housing forecast for 2010.
The upgrade in the forecast is a result of a series of programs being implemented as market conditions slowly improve. The tight mortgage market is also beginning to show progress, particularly in the West. The average price of a home is now forecast to deflate 7.2% for the year nationally, a full 1.5% better than first forecast.
Although government programs were slow to get off the ground, more than 2.4-million homeowners have obtained mortgage modifications through government-backed programs or directly from their own banks. Progress has been slow and agonizing for those at risk of foreclosure, but changing attitudes on bankers parts’ to deal with the crisis is showing some level of improvement
As a result home values in some of the hardest hit markets in the nation are rising, including areas of California, Ohio and Michigan. When home prices got so low that even bargain-hungry investors thought they were a good deal markets were re-energized. The expiration of the federal tax credit, however, should throw a wrench into the market’s overall recovery.
Additional programs expected to be announced by the Obama administration should aid in the recovery from the worst housing downturn since the Great Depression.
To a large degree, the better than expected level of housing deflation in the U.S. is contingent upon a further projected loosening of restrictive mortgage lending standards by bankers towards the end of the year, despite rising foreclosures.
The high number of foreclosed properties listed for sale and being held back by banks still, however, pose a major threat to the housing market’s recovery. The U.S. Census Bureau estimates that 7.1-million homes are being withheld from the market for a variety of factors, including impending foreclosure.
High unemployment, however, remains the largest stumbling block to a full national recovery in housing market activity. There’s no such thing as a jobless recovery for the housing market since unemployed people don’t become home buyers without access to financing. Unemployment topping 18% in real unemployment, including those who have given up looking for a job will make it difficult for markets to recover until businesses start re-hiring employees and that takes financing for business.
Some stabilization has begun in markets in California, Michigan and Ohio. But the recovery is anything but swift, and is not projected to develop on a wide scale by Housing Predictor analysts until at least 2011.