Analysis: Housing Market Back on Downward Slope
Inevitably, the housing market endures cycles of upswings and downturns. Generally, so long as those fluctuations remain within reasonable bounds, there is nothing amiss about it.
What we saw beginning in 2008, however, was a frightening aberration. Now, despite countless media reports touting our “ongoing recovery,” our Miami foreclosure lawyers on the front lines of this issue understand the silver lining view may be a bit optimistic.
In fact, the “recovery” we saw may be more of an illusion than initially realized, and there is little doubt at this point that we are on track for another market downturn. The slide on the immediate horizon may not be as severe as the crash, but there is strong evidence to suggest the reports of incremental steps toward a positive change may have been premature.
The reasons are somewhat complex and always interwoven.
To begin, there is that so-called “shadow inventory” of properties. These are homes that have been foreclosed on for some time, but have yet to be released back on to the market. Investors and banks have been holding out for the market to bounce back so the losses aren’t nearly so great. However, this has had the effect of artificially driving up home prices. Once those properties are released, we will see home prices dip once again.
In states like Florida, the backlog of foreclosures is a serious issue as the judicial pipeline has slowed to a molasses pace. Once these homes are released back onto the market, it will impact the supply and therefore drive down prices.
There has also, as we’ve reported here, been a large influx of corporate investors snapping up foreclosed properties in order to turn them into rentals. This served to push home prices upward. However, now many of these firms are beginning to recognize that the overall business model was flawed. It failed to take into account rising vacancy rates and decreased home values. Many are now working to sell off their inventory.
With all these new, reduced-price homes entering the market, one could be forgiven for thinking this would work to the benefit of first-time home buyers. The problem is that more stringent lending standards, passed due to years’ worth of reckless practices by lenders, has kept many of those first-time buyers from getting in the game.
On top of that, people who took advantage of the federal government’s Home Affordable Modification Program, which temporarily reduced interest rates, are now seeing those rates once again climb. For some, the increase is going to be too much too burden. We’ve effectively kicked the can down the road on this one, and now the time has come to pay. This increase in monthly payments is going to push a significant portion of homeowners closer to foreclosure.
In the meantime, Washington is once again paving the way for Wall Street to create new mortgage-backed securities – and once again betting on our future.
Compounding the problem is the fact that there has been no significant effort to establish good-paying jobs in this country. Absent that, our economy is either stagnant or sliding. Still, homeowners are beginning to use their home equity as a way to generate funds. They may soon find themselves in trouble when their homes are once again worth less than what they owe.
If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Legal for a confidential appointment to discuss your rights. Call 305-358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Debt Warriors with Bruce Jacobs,” discussing foreclosure topics that matter to YOU.