While home sales in September were down slightly from a relatively strong month in August, they were up from a year ago, giving encouraging signs of a strengthening market and potential for stabilizing, if not appreciating, home prices. These signs include an increasing demand, shown by the number of people shopping for homes, and the decreasing inventory of homes for sale, in conjunction with some of the lowest levels of new housing construction since 1960s when the Beatles first came to the United States.
Of the 3.48 million homes sold in September, 32% were first-time home buyers. With more and more people entering the market, the persisting obstacle for most is still the restrictive lending environment. In a plea to banks and policy makers, NAR President Ron Phipps said, “We need to remove the roadblocks to a housing recovery—not place more obstacles in the way of financially qualified buyers.”
With an increasing demand and shrinking inventory, it is hoped that banks will begin to see the market potential and start to lend to otherwise creditworthy home shoppers, opening the road to a more rapid recovery. While consumer confidence still remains at all-time lows, retail spending increased 1.1% last month, a positive sign of growth fueled by the approaching holiday season, which could propel the U.S. into a promising new year.
More Mortgage Aid Offers Refinancing Hope to a Potential 3 Million Homeowners:
The Federal Housing Finance Agency (FHFA) announced on Monday, October 24, 2011, that they were rewriting parts of the Home Affordable Refinance Program (HARP) in an effort to help more homeowners struggling to make their monthly mortgage payments eligible for refinance. It is estimated that the changes to HARP could help somewhere between 500,000 to 3 million households take advantage of historically low interest rates by refinancing their home.
While taking steps to help lower monthly mortgage payments, the FHFA will not consider actions to lower principal or forgive amounts borrowed.
Senators Grow Impatient with Mounting Foreclosures:
As Fannie Mae and Freddie Mac continue to absorb more and more foreclosures, senators in Washington are growing impatient with the way these distressed properties are being handled. To express their frustrations, thirty-three senators authored a letter to the FHFA, which stated that 10.4 million households are facing the possibility of defaulting on their mortgages, and asked when the joint venture between Fannie Mae, Freddie Mac, the Department of Housing and Urban Development (HUD), and the Treasury Department—formed for the purpose of developing a plan to handle the foreclosed properties—would have a solution. The urgency to put these homes back on the market is compounded by the financial risk that these distressed properties represent to Fannie Mae and Freddie Mac.
In response to these pressures, the joint venture has issued a request to other organizations, including private sector investors and businesses, to suggest ideas as to how to efficiently get these properties back on the market in a way that will benefit all parties involved.
Sources: National Association Of Realtors, FHFA, Wall Street Journal, Inman
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