Housing Industry’s In Trouble
If ever there was an obvious headline, the one above is it. The housing industry is in trouble, and it doesn’t look like there’s going to be a fix any time soon.
So what’s going on? We’ll start with the news that existing home sales are at their lowest level in 15 years, down 27% over this same period last year, which was a horrible year in the first place. The $8,000 tax credit ended in April and many conservatives were happy, saying the government shouldn’t have had it in the first place, and look where we are now. Home sales can’t keep up with foreclosures, and those homes that are being bought are going for around 25% less than what they were worth because of it.
The Midwest and Southwest are struggling the most. Home sales out that way are down 33%, and bank closures aren’t helping. Neither is Arizona’s crusade against immigrant workers, one which I’m sure legislators out that way thought would help its legal citizens find work, but instead has created a backlash against the state and an interesting exodus of some of its long time citizens, leaving homes that have no buyers.
Already mentioned was foreclosures, and it’s been determined that at the present time 1 out of every 10 homes is close to being foreclosed upon. Actually, that figure is down a tenth of a percentage point from the end of April, which is nothing to smile about. Arizona and Nevada continue to have high foreclosure rates; how long can it continue to be at a high rate, since it has to slow down at some point by pure attrition?
And, interesting enough, the average home size for new homes is on the decline as well, dropping about 150 square feet over the past year. That doesn’t sound like a lot, but the trend had been towards larger, more spacious homes and now consumers are looking for ways to save money, and are not only cutting down on the size of homes but on some of the luxuries as well.
What are the two main problems with housing? Unemployment and banks. What are the two main ways to fix the problem? Employment and banks. Mortgage rates are at their lowest level in, well, decades, yet banks aren’t approving enough people to take advantage of it. Sure, banks have had to tighten up their processes, and that makes sense, but they’re taking longer to make decisions, and sometimes time is of the essence. There are still banks that are behind on figuring out loan modifications, and that was supposed to have been completed a couple of months ago. As for unemployment… well, we just might be stuck on that one, as federal money is being spread a bit thin, and communities are loathe to try something potentially drastic to help get things moving in a positive direction.
If you have a home to sell right now; don’t. If you’re looking for a home right now; do it!