Foreclosures Caused Fall in Real Estate Prices
September 11th, 2009
The flood of foreclosures caused the fall in real estate prices that in turn negatively affected the economy. America is in the grips of the worst economic crisis since the time of the Great Depression.
California is one of the worst affected regions. It is expected that the state and federal governments will take steps to mitigate the crisis and give a kick to the economy.
The crisis in the real estate is pulling down the whole economy and creating a credit and unemployment crisis. The Congress should first focus on the housing sector. Unless this slide in house prices is halted the economic troubles will continue unabated. It might even get worse.
The first task of the new Congress would be to create a stimulus package to get the economy started. The focus has to be on housing. In similar vein the California Legislature must pass such a package with the priority being given to housing.
If the price fall in the real estate market is not halted there will be more foreclosures and more trouble that will drag down prices even further. The collapse of the housing sector in California is one of the major causes of the economic woes of the state. In 2008 the construction of new house fell to 66,000 from 208,000 in 2005. It calculated to a decrease of 68%. It resulted in the loss of 287,000 jobs in the state and $25 billion in the field of general economic activity.
With the house values continuing to fall across the country, the ordinary American is worried and hesitant to buy houses at this point because of fears that a stable situation has not been reached as yet – prices might fall further. This has resulting in unsold houses sitting choc-a-bloc on the shop shelves causing demand to further outstrip demand.
Thus the prime focus of any economic policy should be on the housing sector and stabilization of prices and creating of jobs. The potential buyers of houses are still sitting on the fence waiting for the price fall to reach the bottom. To make things move the buyers must be persuaded to make the move forward and start buying. This alone will stop the downward spiral.
The enactment of a federal tax credit ranging from $10,000 to $22,000 will make it possible for all the qualified buyers of houses to take the plunge. This must be accompanied by low interest rates (2.99%) applicable to those who buy in 2009.
- Foreclosure Climate Changes Spirit of Competition to Cooperation Among Contractors
- Bouncing Cheques Issued by Title Companies Lead to Foreclosures
- Increase in Foreclosures Prompting Class Action Legal Suits
- Avoiding Foreclosures by Walking Away From Loans are not Without Problems
- Foreclosure Assistance Being Taken on Tour by Housing Advocate
- Washington Mutual, the Symbol of the Foreclosure Crisis, Continues to be in Trouble
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