Since the World War II, the United States of America has once again been undergoing economic recession. Due to this crisis, the Real Estate Market is also affected since 10% of the United States total economy output belongs to it.
In every street in town, you would usually see a “for sale” signage on most houses. Having a house of your own is becoming harder to achieve. Many people have also lost their jobs due to the economic crisis.
Job Loss
The unemployment rates have been skyrocketing. With the reduction of income, most homeowners are far behind their mortgage payments thus making it very difficult for them to get some money to be able to transfer to a new home. There has been a dwindling demand for new houses. Companies building subdivisions had gone insolvent. Plentiful of new houses are available in the market, but they have very low chances of getting sold. Unemployment has made people incapable of paying for their mortgages. Hundreds of people are forced to make their houses available for retail, and they opt to stay in a much cheaper place.
Job loss means people will have to strive hard to make ends meet. There is a dramatic rise of foreclosed properties because of the incapacity of people to pay for their mortgages.
Property Values are Dwindling
Real estate markets are doing their best to keep up with the business. With the people being jobless, there is also an added drop to their urge to buy new houses. Therefore, there is a distinctive discrepancy between the number of buyers and sellers. This obviously has turned real estate into a buyer’s market. With the dwindling of property values, capable home buyers can swiftly get a house. Sellers would most likely promote the house for less than the cost just to keep selling houses. Prices of houses have become cheaper, so that buyers could still afford them. Capable buyers get a house with much optimism to resell it at higher cost when the economy picks up. For those who have the money, this would be the perfect timing to buy a real estate since prices are at their lowest
Austerity Measures
The government is constantly trying to find alternatives so people can afford to buy a house. The government gives people some options on how to pay off their loan. It could be a 30-year or 15-year fully amortizing rate, an interest only payment and a base rate which excludes the monthly interest.
An example would be the proposed short sale transparency law. The bill authored by House member Susan Davis (D- San Diego) was introduced to give homeowners-at risk of foreclosure-a fair chance to avoid further damage to their credit rating.
An additional example in helping the homeowners would be the proposed short sale transparency law. This law would urge bankers to grant the lowest amount they would possibly take for a house or property in a short sale. This law aims to help people get an opportunity to own homes even when they’re in the midst of financial turmoil. Currently, the real estate market is becoming more stable. However, even with this improvement, people should not be overly confident about it. It is very early about the real situation of the economy. Even if it is seemingly making progress from its downturn, it would take significantly more time to have it brought back to a normal state.
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