People talk. Right now, people like to talk about the economy and this whole “recession” thing that was supposedly set off by defaulted loans within the housing market. People are still talking.
In a recent press release from reuters.com, Mark Zandi, a chief economist at Moody’s Economy is quoted in saying that the housing crash “is not over”. In a projection by the S&P Home Price Index, the housing market will hit a 38% decline in the third quarter of 2010. It previous worst was seen early last year, dropping a hefty 32%. This decline essentially means that home prices will drop and foreclosures will be up on the rise once again—another buyer’s market with no available buyers.
Home prices have been rising recently, leading many to think that the housing market was back on the up and up. In fact, the rise in price is due to the subsiding of foreclosure sales. Government programs, such as the Home Affordable Modification Program, have helped to quell such home sales therefore driving up the average price of home sales—the desired reaction on behalf of the housing market, but one that will not last perpetually.
A particular indication pointed out by real estate expert blogger, David Curry, is the continual rise in delinquency rates on mortgage loans. In a market that is supposedly gaining strength, our delinquency rates continue to rise which means that more and more homeowners are unable to afford their mortgage loans in the current economy. Mr. Curry had this to say:
“The delinquency rate for Freddie Mac’s loan portfolio increased in September to 3.33%. The August number was 3.13% and here’s the real kicker—one year ago the rate was a mere 1.22%.”
So it appears as though the economists are not merely being preemptive in their pessimistic view about this current (albeit momentary) market upswing. According to Mr. Curry, the market still has a ways to go for recovery if you run it by the numbers and not the estimations of easily excitable realtors. Although, it’s not all bad. We’re only looking at six percents worse than we were before, so we know what to expect. And as trends tend to indicate, once something bottoms out, the only way it can go from there is up. So there’s something to look forward to.
I write this update to make sure FSBO’s are prepared. The ability to sell your home very much relies on current market conditions and right now, home sales are up and buyers are looking. Unfortunately, economists are predicting that this will not last and the housing market will once again see a decline come 2010. Talk of recovery may spur a little market activity, but it won’t bring the dog back to life. Sorry to rain on the proverbial parade, but in the end, it’s better to be prepared for the worst and hope for the best than be caught out in the rain in your skivvies.
Tags: Housing Market slump
