Unemployment Generate More Foreclosed House Listings

The number of foreclosed houses listings is threatening to go up further if the employment situation would not improve soon. The initial wave of the foreclosure problem was brought about by loose lending and low interest rates that encouraged many people to take out loans and buy properties that they could not afford.

But this time around, the next wave of foreclosures will include homeowners who were creditworthy but were forced to go into foreclosures because of some mitigating circumstances, foremost of which is job loss.

Industry experts said that the pace of property sales will remain low, until some improvements could be seen on the job market. They do not expect the unemployment rate to go up until mid-2010.

They added that even if the unemployment rate tapered off, property prices are not expected to go up significantly because of the large number of repo houses listings. They predicted that home prices will return to their normal average increase by 2013.

There is a consensus in the housing industry that the job market needs to improve substantially for it to achieve a significant recovery.

Many industry experts are anticipating further declines in home prices. But some experts believed that home prices have bottomed out, helped by demand from first-time homebuyers and investors. However, they expect prices in some housing markets to continue to drop, such as Manhattan.

The federal government has been aggressive in its effort to help the housing market recover fast. It has launched several programs that it hopes will help distressed homeowners save their properties from foreclosures. One of the programs gives incentives to lenders to encourage them to workout solutions with troubled homeowners by providing loan modifications.

Another program that seems to be successful in reducing the number of foreclosure houses and helping revive the neighborhoods is the $8,000 tax credit given to first-time homebuyers of foreclosure properties. Many potential homebuyers who are holding off buying properties because of economic uncertainties were encouraged to go out and buy houses to take advantage of the tax credit.

The federal government also provided stimulus funds to state and local governments to help restore neighborhoods severely affected by foreclosures. The stimulus funds are used to buy properties on distressed houses listings, renovate and sell them to low and middle-income families.

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