When will the housing market recover?
Whether you’re a homeowner, real estate agent, real estate company, bank, politician, or just someone who’d like to buy a home sometime soon, that question is one that just about everyone’s asked at one point or another over the last few years.
Truthfully, we here at Movoto aren’t sure when any sort of recovery will finally occur, but we do have a possible road map to a housing recovery, courtesy of U.S. News.
Please keep in mind that this may or may not be a good plan; it’s just simply a plan among many being currently thrown about. But if we were to follow this outline, the steps would follow as such:
More Jobs and Further Economic Growth
This may be a “duh” statement, but high unemployment, particularly among 25- to 34-year-olds, is going to prevent a housing recovery. Economic recovery has to happen long before housing can correct itself. Simply put, “the pace of job growth needs to double before it translates into the broader economic growth needed to bolster a housing recovery.”
Clear Up Foreclosure Processes
Lenders robo-signing foreclosure paperwork, court delays in select states, government probes into mortgage-lending practices, and other factors have caused foreclosures to slow down and backlog to increase. Until processes are made clear and lenders are completely sure about how foreclosures should be properly processed, a housing recovery will elude the country.
Speed Up Foreclosures Processes
The U.S.’s shadow inventory needs to hit market. According to a professor of real estate finance at George Mason University by the name of Anthony Sanders, “The longer this goes on, the longer the foreclosure inventory will perpetuate and the longer we’ll be stuck in a rut.” Unfortunately, when these homes in shadow inventory hit the market, home prices will continue to tank. Sadly, this is what it will take for a recovery to happen.
Bank of America strategist Chris Flanagan put it this way:
“The implications of what we’re seeing is that you have to have prices go down before they go up,” he says. “At a minimum, things need to make it through the pipeline. Having it sit there is a dead weight on the economy and it ultimately creates more downside potential because of the backlog.”
Decrease the Inventory
The only way for inventory to be reduced is to lower prices so more people will buy homes, a tactic which “should help boost prices in the long run, and price appreciation is good for the housing market”. But bankers and servicers don’t want to decrease prices too much, because they might take big losses — and stick taxpayers with the tab.
Have Monthly Rents Increase
Finally, after the economy and jobs market right themselves, the last step would be to turn home renters into homeowners by increasing their monthly rent. More families will buy homes if you make renting cost more than buying. At this moment, it’s already cheaper to own than buy, but with the economic volatility currently plaguing the country, they have no interest in buying. That would change once the U.S.’s economic situation improves.
Stephanie Huskey is the resident real estate blogger for Movoto and she personally thinks the housing recovery won’t happen until the government implements conservative policies and gets out of the real estate business. (Again, that’s just me.) Interested in getting her advice on your blog? She’s currently seeking guest blogging opportunities so she can share her knowledge with new communities! You can find her over here at Elance.com.