The bare fact is that, the housing sector of the US economy is still struggling to stand up on its feet. There are many factors that are affecting the recovery process of the housing sector that are yet to be resolved. Until these factors are resolved an end to the troubles of the housing market is very far from sight.
The housing market has been seriously hit by the continuous increase in unemployment. More and more homeowners are losing their source of income and so becoming delinquent on their mortgages.
Delinquency on the part of homeowners causes mortgage providers to initiate foreclosure processes against them. And as such more homes are being put up for sale at lower prices. This process has led to the continuous decline in the construction sector and subsequently, the loss of more jobs.
But without the financial power to make purchases, homes whether newly constructed ones or foreclosed ones will remain on the market without being bought. This opinion is confirmed by information from the National Association of Realtors which shows that decline in the sale of homes in the month of June is the lowest for the past 7 months. This decline is rightly so, judging from the rate of unemployment which currently stands at over 9%.
A little over six years ago, many people saw homes as the ultimate investment. A lot of people queued up to take home loans so they could afford to buy a home. During those times, the US housing market enjoyed its good fortunes.
Sales went as high as 7.08 million then the effects of bad mortgage practices began to show its head, resulting in reduction year after year. Down from 7.08 million, the data from NAR shows that at the moment purchases in the housing sector is at 4.77 million.
There have been aggressive efforts by the government and the mortgage companies to help homeowners who are finding it difficult to settle their monthly mortgage payments. In spite of these measures, many homeowners are losing their homes simply because they are well behind payment schedules and cannot get help to settle the present monthly payments let to talk of catching up on previous defaults.
Such homeowners have no choice whatsoever than to either settle for short sale option or have their mortgage provider foreclose their mortgage.
With an increasing number of homes being put up on the market either through short sale or foreclosure, it is not surprising that 16% of contracts placed for the acquisition of new homes were cancelled in favour of buying short sale or foreclosed homes which are relatively cheaper.
According to the National Association of Realtors, which has been monitoring occurrences on the housing sector for the past three years, this is an astronomical increase from last month’s 4%.
Contrary to figures that show that more homes that were previously occupied are being put up on the market increasing supply and as such prices must fall, the average cost price of such homes has rather increased to about $184,300.
Analysts are unable to give a clear estimation of when the unfavourable competition between existing homes and newly constructed homes will end. This is because as of May, an estimated 6.35 million homeowners across the country were behind on mortgage payments.
Mortgage processing delays were also affecting a proper estimation of the number of homes to be foreclosed. If these are anything to go buy, then the troubles of the housing market are far from over.