The labor market is still bad and unless the unemployment rate goes down, there might not be enough people able to get a home mortgage..
Dallas, TX (PRWEB) June 10, 2011
The current US real estate market is full of empty houses while Unemployment stays high. The current market focus is on foreclosed homes and reduced sale prices. The national vacancy rate was at 11% recently and is slowly improving now... a Unemployment Extension demand still remains high, according to RealtyPartner.
Until last month, Maine at 22% had the largest percentage of empty homes in the nation. It was followed by Vermont at 20%. Florida, Arizona and Alaska followed next. In Maine, the largest unoccupied homes were actually vacation homes. If you leave the vacation homes aside, then the other ones come at about 11%, which is nearly the national average. The interest rates are currently very low, at about 5%.
According to RealtyPartner.com and Zillow.com, the lower the interest rates, the higher should be the home prices. Ideally, low home prices and low interest rates should bring more buyers into the market but the situation is not so. The mortgage lenders are not willing to relax their strict lending procedures. This has prevented potential buyers from buying the homes.
The huge amount of foreclosed homes entering the market is yet another huge concern for the market. In 2010 alone, about 1 million homes were foreclosed which was 1.7% more than the number of foreclosures in the year 2009. Right now, there is a huge backlog of foreclosed homes.
For the market to improve, the foreclosed homes have to be off the market.
The Fed is likely to end its quantitative easing in June, 2011. The interest rates and house prices might hit another bottom after that. From there on, the market is expected to start rising by the beginning of 2012. The market is currently focusing on the huge number of foreclosures.
According to experts, if the supply of new houses does not rise, there may be a shortage of new houses in the beginning of year 2012. The market requires one and a half million houses to cater to the rise in population. With the current amount of empty homes, it comes around to about seven months worth of supply. If enough new homes are not built, the market may actually be short of houses beginning next year, according to RealtyPartner.com. The counter opinion is that the foreclosure situation may not improve anytime soon.
The labor market is still bad and unless the unemployment rate goes down, there might not be enough people able to get a home mortgage... the Unemployment Extension demand is higher than it has ever been. For those who can afford a mortgage, the current interest rates are at 5% and the home prices are also low. It is still hard to keep paying the mortgage.
Unemployment & Unemployment Extensions can cause a lot of problems including reduced savings and depletion of credit limits. With that being said it is really hard to say about what the real estate will be like in the future months. Most experts are of the opinion that it might not improve unless the job market shows good signs of improving.
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