With Foreclosures persisting the Recession continues in the Housing Market

Foreclosures are persisting and this has caused the recession to continue in the housing market. It is better not to be over optimistic about this segment immediately.

For the last couple of years the trend has been downward with property prices tumbling while foreclosures have been mounting. Stan Humphries of Zillow.com speaking at an event of National Association of Real Estate Editors at Austin in Texas foreclosures focused on some myths the consumers have been hanging on so as to make sense out of the various statistics and figures pouring in.

Firstly it is being wrongly believed that the recession in the housing sector has come to an end. It has not. Humphrey thinks that the bottom will not be reached till the third quarter – from the viewpoint of the nation. Doug Duncan of Fannie Mae, present at the event also agreed with this calculation.

The second mistake is to think that once the bottom has been reached the housing sector would zoom back high jumping to the levels of the boom years. This will not happen for quite some time. The markets will remain flat for a long time. First it will reach the bottom and the second stage will see it remaining flat.

Thirdly it would be erroneous to think that the worst of the foreclosure crisis has become history. It is nothing but wishful thinking opines Humphries. He does not think that the problem will stabilize prior to late next year.

The housing segment of the economy was saved because of the tax credit – this too is a misconception. Those who purchased houses would have done so in any case with or without the carrots of tax credit offered by the government. What really mattered was the low price of houses and the low mortgage interest rate together with the support given by the Federal Housing Department; the latter has largely gone unnoticed.

Despite these negative points it is understandable why many of the house owners want to indulge in bright thinking. Douglas Culkin of National Apartment Association speaking over a telephonic interview said, “They went from what everyone thought was a lucrative asset to something worth a lot less than they owed on it. We all want it to get better.” Many are eager to sell their units so as to get along with other plans. The house owners are wearing of thinking how their property is losing its equity like the new vehicle being whisked off to the dealers.

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