Gradual and uneven progress in the housing market continues without government support. The market has shown remarkable improvement from the initial drop after the expiration of the home buyer tax credit this past July. Although higher-than-normal distressed sales skew the overall picture of home prices downward, inventory remains at pretax credit expiration levels. The rock-bottom interest rates of 2010 are likely to trend upward. As economists anticipate rates at or above 6% by the end of 2012, buyers are moving off the sidelines and into the market.
Recent reports suggest the economy is picking up steam even though it is not yet fully reflected in the job market. In terms of economic growth, America outpaces all the other G7 nations except Canada. However, when it comes to adding back jobs, America is the weakest. During the recession, businesses looked for ways to increase efficiency and productivity. U.S. productivity, or output per worker, doubled in both of the past two years. A full housing recovery depends on growing employment. Without jobs, most Americans cannot buy new homes or afford their current ones. As the economy continues to pick up steam, employment will likely follow suit as there is a limited amount of productivity workers can provide.
While the economy improves, stimulus efforts by the government and the Federal Reserve Board will gradually wind down, which typically spurs rising interest rates. Meanwhile, buyers continue to benefit from historically favorable buying conditions and sellers are encouraged by increased market stability.
Summit-Level Solutions to Foreclosure Uncertainties
Five of the nation’s largest banks met in late March along with state and federal officials to discuss a settlement that aims to correct questionable practices in the mortgage industry. Reaching an agreement could resolve foreclosure procedure problems sparked during the robo-signing scandal. While most of the meeting focused on servicing standards, the hot topics of debate included reducing loan balances, broad-based write-downs, and the extent to which legal claims will be dispelled.
The Obama administration is encouraging a quick settlement in order to prevent additional delays to the housing market recovery. Their concern, according to RealtyTrac, Inc., is that “foreclosure filings have decreased immensely in the past six months to the lowest level in three years in February.” James Dimon, chief executive of JPMorgan Chase & Co, concurred, stating that, “Any settlement should produce rational policies that work for the American public. That’s what we need.”
While tangible results have yet to be seen, the good news for homeowners, buyers, and sellers is that all parties involved are taking steps in the right direction. Their focus is on a solid resolution to the technical issues that are creating a bottleneck in the disposition of foreclosures — a prerequisite to the recovery of the housing market.
Sources: National Association Of Realtors, Wall Street Journal
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